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Books on Turkey
REPUBLICAN REFERENCE
Area (sq.km)
780,580
Population
68,893,918
Capital
Ankara
Currency
Lira
President
Ahmet Necdet Sezer
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Update No: 101 - (27/09/05)
German electoral result helps Turkey to start EU talks
The European Union is the key to Turkish politics right now, and within the EU
so is Germany. Brussels looks set to start membership talks with Turkey as
scheduled, despite last minute objections by France and some in Germany. The
cliff-hanger result of the German elections on September 18th, with one per cent
of the vote dividing the two main parties, was a boon here to those wanting
talks to proceed and to succeed. It was a massive personal triumph for German
chancellor, Gerhard Schröder, who had been expected months beforehand to lose
by a landslide.
Ahead of the elections Angela Merkel, leader of the German Christian Democratic
Union party (CDU), had circulated a letter to European heads of government in
which she said: "We are firmly convinced that accepting Turkey would
overburden the EU politically, economically and socially and endanger the
process of European integration." She proposed rewriting the negotiating
framework to include "privileged partnership" as the talks'
alternative goal to membership.
The German chancellor on the other hand favours Turkey's EU membership and
remains at the helm until the crisis is resolved, which could take weeks. After
being expected to lose to the CDU, the governing SPD remains leader in the
caretaker government and in a strong bargaining position.
The talks duly started on October 3rd as planned. Had she been elected, some
might have expected Ms Merkel to put a stopper on them, not by attempting their
last minute cancellation, but by obstructionism once they had begun. Diplomats
believe that that is now unlikely, if only because it would mean a bruising
battle at a time when her hands are full at home; and she will have plenty of
future opportunities to push her views on Turkey if she pulls off the unexpected
and assumes an influential role in German politics.
The French raise the Cyprus issue
EU ambassadors meeting in Brussels worked out language to defuse a dispute
raised mainly by the French that threatened to block the talks, arising from
Turkey's refusal to recognise the divided island of Cyprus, an EU member since
last year. The agreement still has to be finalised by EU foreign ministers and
the talks face a long and rocky future. Still, diplomats now are optimistic that
they will at least continue.
"The French did not block it, so it looks much more clear now," said
an EU diplomat familiar with the ambassadors' closed-door meeting. The Cypriot
ambassador had asked to help draft the text, the diplomat said, which also
suggests Cyprus wouldn't block the deal.
Whether to admit Turkey into Europe's mainly Christian club of richer nations
has emerged as one of the most divisive divergent views of the bloc's identity,
its political future and its strategic role. The negotiations - in reality a
process in which Turkey will have to adopt more than 80,000 pages of EU laws -
are likely to take at least a decade and face huge obstacles.
Even so, after 40 years, the long process on admitting Turkey started on October
3rd, indicating the EU is at least open to the idea of admitting a large Muslim
country. Some EU countries, such as the UK, see that as essential to stabilising
Europe's relationship with the Middle East and their own Muslim citizens.
Recently, Turkey fulfilled the final condition for the start of membership talks
by signing an agreement that extended its existing customs union with the EU to
include the 10 countries - including Cyprus - that joined the bloc last year.
But at the same time, Turkey separately declared that extending the customs
union doesn't mean Turkey recognises Cyprus as a country. Suddenly, the launch
of talks looked to be in doubt again.
French politicians including Prime Minister, Dominique de Villepin and President
Jacques Chirac asked how Turkey could expect to start negotiation for EU
membership when it refused to recognise an EU member state.
Under the deal worked out, however, the EU said that Turkey could start talks on
time because its statement on Cyprus is purely political and has no legal
relevance to the process. Nevertheless, the EU declaration calls for the issue
to be reviewed next year.
Turkish Foreign Minister, Abdullah Gul, appeared to address a demand made by Mr
Chirac that Turkey needed to clarify its position on Cyprus. Mr Gul said in an
interview with the Turkish Daily News that his country is ready "to
establish relations with the new partnership state that will emerge following a
comprehensive settlement on Cyprus." Cyprus has been divided into a
Turkish-occupied north and a Greek Cypriot south since a 1974 Turkish invasion
in response to a failed coup by supporters of enosis or union with Greece,
organised by Greek officers seconded by the then regime of 'The Colonels' in
Athens.
The Turkish government and Turkish Cypriots backed a referendum to approve a
United Nations brokered settlement for the island in April 2004, but it was
voted down by Greek Cypriots, much to the embarrassment of the EU, which had
hoped to reunite the island before it joined the political and economic union on
May 1st and had received false promises from the Greek Cypriot leaders, that
they would not campaign against the UN proposals.
General EU pressure from Brussels on Cyprus
Turkey will face continuing European Union pressure to normalise ties with
Cyprus despite the October 3rd start of EU membership talks, the bloc's top
enlargement official said recently.
Full implementation of an EU-Turkey customs union pact to include Cyprus was a
matter of "extremely serious concern" for the entire 25-nation bloc,
EU Enlargement Commissioner Olli Rehn told reporters. "Clearly this is a
red line for the EU - this is not a matter of negotiation, it is a matter of
commitment by Turkey," Rehn said ahead of talks with Turkish Foreign
Minister Abdullah Gul. Rehn added that Ankara must not speculate on "any
wavering" by the EU on issues like granting Cypriot ships full access to
Turkish ports.
Backers of Turkey's EU membership bid say Turkey's decision in July to extend
its customs union pact with the EU to cover Cyprus clears an important legal
obstacle to the start of the entry talks.
But in a move which has irked France, Cyprus, Greece and others, Ankara has also
made clear in a unilateral statement that this does not mean diplomatic
recognition of the Greek Cypriot government.
EU governments will also issue a separate declaration demanding that Turkey must
ensure a quick "de jure" normalisation of ties with Cyprus. The EU
counter-declaration will insist that Ankara must implement the customs union
deal in a matter which is "effective, complete and
non-discriminatory."
Austrian Greens go ballistic
Austrians are as hostile to Turkish EU entry as the Germans and in a related
development, veteran Austrian Greens member of the European parliament Johannes
Voggenhuber, said recently that "Turkey will never be a member of the EU -
never!"
At the Alpbach Forum of political, economic and cultural discussions, he said it
was true that Europe had already promised Turkey negotiations 40 years ago, and
that this promise was now being kept. "But where are the heads of state and
government getting their legitimisation from? Certainly not from the citizens -
they were never asked.
"The heads of state and government of the EU are deciding with incredible
arrogance over the heads of their citizens," Voggenhuber said. Voggenhuber,
who has represented Austria in Brussels and Strasbourg for a decade, said
today's EU was only "a pseudo-Europe." It reminded him of 17th Century
Germany, with the various princes managing to prevent political unity.
"That's exactly where we are today. Europe is experiencing a time of re-feudalisation,"
he said. Included in this process were the various power-holding institutions in
Brussels. True unification was being held up. In this situation of a
"twilight zone," the citizens were as powerless as ever.
The European Commission says in reaction that the prospect of membership talks
failing - they could last a decade or more - is already countenanced in a draft
negotiating statement saying the talks are "open-minded" and not
certain to succeed.
As regards Ankara's reaction, "We are pretty sure the voice of reason will
prevail at the end and that we will be able to get through this difficult
period," a Turkish official said.
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AVIATION
THY deals with Boeing for next-generation 737s
Turkish Airlines (THY) has ordered from Boeing next-generation 737 800s, as part
of an order placed by the carrier in 2004, it was reported recently. The Boeing
firm said that this deal was worth 542m Euro at list prices and the airplanes
are scheduled for delivery in 2008, Anadolu News Agency reported.
According to general manager Temel Kotil, THY plans to open new markets in
Europe and central Asia and it seems that it is progressing with its growth
strategy. Kotil believes Boeing's next-generation 737s operational flexibility
will play an integral part in THY's growth strategy. The Turkish group operates
a mix of 43 Boeing classics and next-generation 737s. Meanwhile, Aldo Basile,
Boeing sales director for Turkey, said the Turkish economy is expected to grow
at a faster rate than elsewhere in Europe over the next several years.
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CREDIT RATINGS
Fitch affirms TSKB ratings, outlook is stable
Fitch Ratings, the international rating agency, announced on August 29th that it
rated Turkiye Sinai Kalkinma Bankasi's AS (TSKB) long-term foreign and local
currency at BB- (BB minus), short-term foreign and local currency at B and the
long-term national rating at A-(tur) (A minus(tur)), New Europe reported.
The outlook on all long-term ratings is stable. TSKB is the largest
privately-owned development and investment bank in Turkey that is owned by some
of the country's leading commercial banks. It mainly extends medium- and
long-term loans matched funded by facilities obtained from diversified
international and domestic sources. The Turkish Treasury guarantees the majority
of its overseas funding.
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FOREIGN ECONOMIC COOPERATION
Turkey to intensify trade with Georgia
Speaking at the Turkish-Georgina economic cooperation forum in Tbilisi on
September 13th, Turkish State Minister, Kursad Tuzmen, said Turkey wants to
increase its bilateral trade with Georgia - up to US$2 billion in the next three
years, Anadolu News Agency reported.
He noted that Turkey and Georgia should focus on cooperation which will enable
services, capital and goods to move freely, adding that Turkey wants the Black
Sea region to be a free trade zone.
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FOREIGN RELATIONS
Better relations help turkey boost exports to neighbours
Turkey recently doubled or quadrupled its exports to Greece, Syria, Iraq, Iran
and Bulgaria, the media reported. Turkey used to have problems with these
countries but with the adoption of the strategy of developing trade with
neighbouring states, the country is now achieving success.
This is due to the strategies that were implemented in recent years, Turkish
State Minister, Kursad Tuzmen, said, Anatolia News Agency has reported.
Tuzmen, emphasising trade with neighbours, said Turkey has improved its export
figures adding that exports of 18bn Euro are a considerable amount. Tuzmen,
reminding the export policy towards neighbour countries is in the government's
programme, said: "As soon as we came to power, we started to implement our
projects one by one.
We went to each of these countries; we took part in meetings and now we are
starting to reap the fruits of these efforts. This is the result, figures coming
make us smile despite input costs in our troubled export times."
Volume of trade with countries with which Turkey has had serious problems in the
past has increased by record levels. Exports to Syria increased 49% and to Iraq
58% in the last 6 months. Exports to neighbouring countries have reached 30% of
total exports. Economists underlined that good relations with the neighbouring
states can play an important role in the increase of 17% in the export in the
first 6 months of the year.
Tuzmen evaluated this development saying, "The increase of the exports to
neighbouring states has been 28% even in July when the increase in exports is
1.1%."
Turkey has revised its relationships with countries with which it has
geographical, cultural and historical ties besides having common borders.
These countries include Bulgaria, Georgia, Azerbaijan, Syria, Iran, Iraq,
Turkish Republic of Northern Cyprus as well as Central Asia, Middle Eastern and
Balkan countries, including Russia, Romania, Ukraine and Egypt.
Turkey's exports to this market whose total demand of imports is 300bn Euro was
5.5bn Euro in 2000 and reached 7.2bn Euro in next 2 years.
Tuzmen also spoke about the beneficiaries of the strategy applied to
neighbouring countries in the region.
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FOREIGN TRADE
Kazakstan, Turkey ink trade protocol
The head of the foreign trade agency under the Turkish government, Tundjer
Cayalar, and the Kazak Deputy Minister of Industry and Trade, special
representative of Kazakstan in the negotiations for WTO entrance, Zhanar
Aitzhanova, signed a protocol in Ankara recently on the completion of the
bilateral negotiations for access to the Kazak market of commodities and
services on mutually acceptable terms for both sides, Anadolu News Agency
reported.
Turkey is the member of the working group for Kazakstan's entry into the WTO.
The issues revolving around the bilateral talks concerning the terms of entering
the Kazak market of imported goods and foreign service suppliers in compliance
with the request of the Turkish party have been taking place since July 2003.
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TELECOMMUNICATIONS
Turkey seeks bids for Uzan company
Turkish GSM operator Telsim, the country's second largest mobile telephone
network, will be sold by Turkey's Savings Deposit Insurance Fund (TMSF) in a
tender on December 13th. An auction among the short listed bidders, with a
starting price of 2.804 billion Euro, will be started in the near future, the
fund told Anadolu News Agency recently.
Telsim was seized from the scandal-ridden Uzan family after the collapse of its
two banks, Imarbank and Adabank, in an effort to recoup the group's debts
totalling eight billion Euro. Its sale had been delayed because of legal
troubles over debts to Motorola Inc and Nokia Corp, which have jointly sued the
Uzan family, accusing it of borrowing 2.7 billion Euro to build a
next-generation wireless system with no intention of repaying the money.
According to a statement from the government agency handling the sale, potential
buyers had until September 19 to register an interest in the sale, and final
offers are due by December 5. The TMSF said that the fund will sell Telsim and
as a "total economic and commercial entity," with all its assets and
agreements essential to the successful continuation of the business, including
the 25-year GSM licence with Turk Telekom. Telsim's debts from previous periods
would be paid out of the sale revenue generated. If TMSF decides to continue the
tender process, public bargaining would take place on December 15.
Vodafone Group Plc, the world's biggest mobile phone operator, is interested in
Telsim, which ran up debts of more than three billion Euro to Schaumburg-based
Motorola and Finland's Nokia under Uzan management. "We don't know yet if
Telsim's debts are included in the watchdog's valuation or not," said Basak
Engin, an analyst at Oyak Securities in Istanbul. "If the debts to
Motorola, Nokia and the government aren't included, then the valuation looks
okay, even though it might be at a bit of a discount." The government is
trying to convince Motorola to drop lawsuits seeking compensation from Turkey,
which may be an obstacle to the sale.
The Uzans failed to repay money borrowed from Motorola and Nokia to build
Telsim's cellular network, according to court rulings in the US and Switzerland.
On August 25 Motorola said it has been "frustrated" in its collection
efforts by the Turkish government's takeover of Telsim. Motorola recently stated
that US and UK courts granted its requests to freeze revenue owed to Telsim by
phone service providers in the US, Britain, Belgium, Israel, the Netherlands and
Switzerland. The phonemaker also won a 2.5 billion Euro award against the
Turkish company from an arbitration panel of the Zurich Chamber of Commerce on
June 13.
1st instalment for Turk Telekom
The Lebanese Hariri family's Oger Telecom-led consortium won Turk Telekom's
privatisation tender with a 6.55 billion Euro bid after tough day-long
negotiation at the end of June, reported Anadolu News Agency. On August 19th, an
agreement for the sale of 55 per cent stake in Turk Telekom was sent to
purchaser Oger Telecom which also includes the Saudi Oger Company and Telecom
Italia. The legal proceedings for the transfer of Turk Telekom from state to
private hands was handled by Saudi Oger and Telecom Italia.
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TOURISM
Morgan Stanley: Turkey's tourism sector on the rise
Morgan Stanley, a leading investment bank released a report on August 19 which
read that "Turkey's tourism sector, just like Michael Schumacher on Formula
1 circuits, breaks new records." According to the report, the inaugural
Formula 1 grand prix in Istanbul has become a new tourist attraction and this
will certainly boost the tourism sector. The report said that the number of
tourists reached 11.7 million in the first seven months, but even this figure
does not fully reflect the country's race towards becoming a global leader in
the sector, New Europe reported.
Morgan Stanley expects the tourists arrivals to reach at least 22 million this
year. As a result, Turkey's tourism revenues increased by 205.4 per cent on a
cumulative basis from US$5.2 billion in 1999 to US$15.9 billion last year, and
according to Morgan Stanley's projections, will exceed US$18 billion in 2005 and
US$20 billion next year.
According to the figures of the State Institute of Statistics (SIS), the number
of foreign tourists visiting Turkey in July is up by 22.5 per cent, over the
same period of last year, reported Anatolia news agency. Three million foreign
tourists arrived in Turkey in July. 20.1 per cent of all foreign tourists
visiting Turkey are German, followed by Russian, Briton, Bulgarian, French,
Belgian, Iranian and Greek tourists.
"However, we should not overlook the role of qualitative changes in this
notable improvement. European visitors continue to account for more than half of
tourist arrivals, but the visitors from oil-exporting countries are becoming
more and more important. For example, the number of Russian tourists visiting
Turkey increased by 265.8 per cent between 1999 and last year," the Morgan
Stanley report indicated.
The report also pointed out that the tourism industry is playing a vital role in
boosting the country's economy. The report said, "taking into account the
multiplier effects, the tourism sector has become one of the key industries of
the economy in terms of employment growth and hard-currency earnings that
provide a substantial cushion against Turkey's widening merchandise trade
deficit. Although we believe that the current account deficit is a manifestation
of structural shifts in the economy, it also reflects the country's bottlenecks
in generating export revenues."
The report cited the example of the healthcare sector with less doctors and the
increasing cost of medical services in Europe, Turkey's expanding hospital
network is becoming an outsource centre. Similarly, the report stressed that
geographical factors provide an excellent base for logistical operations (and
aircraft services) that could create value-added jobs and boost hard-currency
earnings.
Egypt, Turkey target better tourism cooperation
Tourism cooperation between Egypt and Turkey will develop in the near future,
New Europe reported recently.
The office of the Turkish cultural and tourism attache in Cairo said the
neighbouring relations between Egypt and Turkey played a vital role in
increasing cooperation, pointing out that the number of Turkish tourists who
visited Egypt this year increased to 1,000 up 30 per cent compared with last
year.
The number of Egyptian tourists who visited Turkey last year amounted to 35,000
with an increase of 12 per cent compared with a year earlier, the office said.
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