Books on Turkey
Ahmet Necdet Sezer
Update No: 100 - (25/08/05)
The French put a spanner in the works
Despite last December's unanimous invitation from the 25 governments of the
European Union (EU) to Ankara to begin the accession process, both sides have
been drifting apart over the past few months, a process hastened by the collapse
of the European constitution in France and the Netherlands.
The resignation of Turkey's senior diplomat charged with preparing for its talks
on membership of the EU has heightened the tension over the country's proposed
accession. Murat Sungar, head of Turkey's special department for EU affairs,
submitted his resignation with just two months to go before the scheduled start
of talks on October 3rd.
Mr Sungar denied he had resigned because he was unhappy with the lack of
progress in Ankara's efforts to prepare for what are being seen as increasingly
tough negotiations to join the 25-member bloc.
But his resignation comes in the midst of a diplomatic tiff with France that
threatens to derail the accession talks before they begin. Recep Tayyip Erdogan,
the Turkish prime minister, is said to be furious with Dominique de Villepin,
his French counterpart, who called recently for Turkey to recognise Cyprus
before it could begin the talks. Mr de Villepin's comments were seen in Ankara
as further evidence of double standards in the EU's treatment of Turkey.
Actually the French Prime Minister was not representing the EU and his remarks
are widely interpreted in the context of his candidacy in the next French
Mr Erdogan said he was "saddened" by the comments: "It is out of
the question for us to discuss or consider any new conditions with regard to
Brussels has been at pains to distance itself from the French prime minister's
intervention and reassure Turkey that the EU is not trying to erect new hurdles
to delay the start of the negotiations. Nevertheless, France could
single-handedly block the start of talks, since the negotiations require a
unanimous mandate from the 25 member states - though Mr de Villepin stopped
short of threatening to use France's veto.
But his remarks point to a problem with Turkey's EU policy that Mr Erdogan and
his government have been trying to gloss over: that Turkey must address the
question of its policy over Cyprus, an EU member. The Mediterranean island has
been divided into Turkish Cypriot and Greek Cypriot territories since 1974, when
Turkey invaded to thwart a coup that would have united Cyprus with Greece. The
international community recognises the Greek Cypriot government in Nicosia as
representing the whole island; Turkey recognises the government of the Turkish
Republic of Northern Cyprus.
Cyprus joined the EU in May last year, and in late July Turkey signed a protocol
extending its existing agreements with the union to include the island. But it
declared at the time that this did not mean it recognised the Greek Cypriot
government. Some commentators wonder whether this position is tenable in the
face of Turkey's policy of seeking nothing less than full EU membership.
At the least, they say, Ankara must take account of the fact that Cyprus is now
a real hurdle in its accession process. "Cyprus, and Turkey's membership
[of the EU], are internal matters in Europe now, and we need to take measures
accordingly," said Murat Yetkin, a columnist on the daily Radikal
newspaper, in a column recently.
Representatives of the 25 member states are to meet in September to discuss
Turkey and Cyprus. "The only question is to what extent the declaration in
any way limits the impact of the signing [of the protocol]," said Hans-Jorg
Kretschmer, head of the European Commission office in Ankara. He said it was
"too soon to say" whether Mr de Villepin's comments would create a new
condition or whether Turkey would have to address the problem immediately.
Turkey feels it already has made significant concessions on Cyprus without any
concrete reward, either for the Turkish Cypriots, who remain formally outside
the EU, or for Turkey. Any move to recognise Cyprus would inflame nationalist
opinion within Turkey.There is a growing view inside Turkey that Cyprus may be
the issue that exposes most vividly its differences with the EU.
Partnership, rather than full membership, proposed by Turkish academic
"It's finished," says Hasan Unal, a professor at Bilkent
University, of Turkey's accession process. He has opposed full EU membership
from the outset, saying an alternative arrangement would suit Turkey better.
What is needed urgently, he says, is a way of stabilising the relationship
between Ankara and Brussels that avoids excessive expectations and
disappointments on both sides. "We have to sort out a new relationship
between Turkey and the European Union," he says.
The task for Mr Erdogan's government ahead of October 3rd, however, is to keep
the accession process in full view and to avoid being distracted by political
"This government is so driven into a corner that it doesn't know what to
do," Mr Unal says. "The next few months are going to be very
Turkey confident tourism will rise despite recent terrorism
As if this was not trouble enough, there has been a resurgence of terrorism.
A bomb attack on a restaurant in the Turkish city of Istanbul injured a Dutch
tourist and a waiter, Turkish media reported recently. According to the
authorities, the bomb was either on a timer or remotely controlled, was hidden
under a table, the reports said.
Five people were also recently killed in a bomb attack in the Turkish holiday
resort of Kusadasi. No group claimed responsibility for that attack, but Turkish
authorities assumed involvement by militants from the Kurdish Workers Party (PKK).
Officials stated that recent bombings in western coastal towns, the heart of
Turkish tourism, would jeopardise Turkey's hope to attract 20m tourists this
year and to raise its tourism income to 18bn Euro this year. However, Foreign
Minister Abdullah Gul assured the public that security measures have been taken.
Resorts along the southwest Aegean coast are famous among foreign tourists and
the region is dependent on tourism.
Meanwhile, the State Institute of Statistics (DIE), announced data for tourism
in the second quarter. Turkey's tourism income of the year amounted to 3.8bn
Euro. The total tourism revenue in the first 6 months of the year was 5.8bn
Euro, Anadolu News Agency reported.
According to economists, tourism revenue was not so impressive when compared to
the number of visitors, but it is expected that this year the revenues will
reach 18bn euro. Tourism plays a vital role as far as balance of payments is
concerned but if it declines below expectations then it will lead to bigger
current account deficit.
According to the DIE data, foreign visitors accounted for 3.2bn euro of tourism
income in the second quarter. Some 71% of foreigners' spending was personal
expenses, while the remainder was money they spent on package tours. Some 99% of
citizens' tourism spending was for personal purposes. In the first six months,
foreign visitors accounted for 4.7bn Euro Euro of Turkey's total tourism income.
Some 7.7m visitors were foreign. The number of visitors exceeded 8.7m, with per
capita expenditure at 658 Euro.
Meanwhile, the World Tourism Organisation (WTO) announced in its latest report
that Turkey was the eighth country in the world which earned the most revenue
from tourism in the year 2004 - a total of 15.9bn Euro. Meanwhile, world tourism
revenue rose 10.3% in 2004 compared to 2003 and reached 622bn Euro.
Top Turkish banker urges domestic investment banking
A top banker recently announced that domestic investment in Turkey's banking
sector should be encouraged despite the benefits of foreign investment in
financial services. Ersin Ozince, the head of the Turkish Banking Association
said in Bilecik that a healthy development of Turkey's banking sector will
benefit the country than any other sector, Anadolu News Agency reported.
Ozince is chief executive of Is Bank, the majority shareholder in Turkey's
leading glass manufacturer. He was in Bilecik to help lay the foundations for a
new Sisecam glass factory.
He expressed satisfaction that there are hundreds of foreign investors in
Turkey's banking sector but added that there is a place in each country for
support of its own domestic investors without deviating from international
agreements governing investors' rights.
Ozince recalled that foreign investment in Turkey played a vital role in opening
doors for Turkey to global markets that would benefit Turkey as well as the
foreign countries involved. Since the crisis of 2001 Turkey has reduced the
number of its banks from 81 to fewer than 50. Turkey adopted significant reforms
in the sector with the increased stability attracting foreign capital.
However, he added that Turkish people have the natural right to want most of the
investment to be Turkish. "This does not mean we should be against foreign
investment, for among registered capital aimed at the banking sector foreign
capital naturally has a high position," said Ozince.
He predicted that Istanbul can become Turkey's financial centre and stressed
that Turkey should be more attentive to developing its services sector and
especially its banking sector. Domestic investment is an important component of
Several European banks have acquired control of Turkish banks this year, with a
possible sale of Garanti Bank the latest deal in play. Unicredito, together with
its Turkish partner, Koc Holding, is acquiring Yapi Kredi Bank in a deal that
values the bank at two billion Euro, ad Fortis bought Disbank for about one
billion Euro. Garanti is controlled by the Dogus Group, which owns about half of
the shares, with the whole valued at an estimated five billion Euro.
Russia to offer new attack helicopter version at tender
Russia's Kamov Helicopters and state arms trader, Rosoboronexport, will offer a
new version of the Ka-50 Black Shark attack helicopter, adapted to Turkish
requirements, at an upcoming helicopter tender in Turkey, Interfax News Agency
"I don't think our chances look any slimmer than before. They remain high
and we'll offer a new version of the Ka-50 helicopter, of course. The
helicopter's configuration is being specified right now," Kamov's general
designer, Sergei Mikheyev, told Interfax.
He said direct sales will be negotiated this time. But an offset procedure will
also be discussed and part of the work may be handed over to Turkish firms.
"Licences may be sold, so Turkey might obtain know-how in the deal,"
Mikheyev said. At the initial stage, Turkey will buy not more than 50 attack
helicopters, although information is available that the number of helicopters
Turkey will buy will not exceed 30, he said. The tender is expected to be
announced early in 2006 and the first helicopters will be supplied to Turkey 18
months after the winner is announced. "This schedule is more rigorous than
the previous ones," said Mikheyev.
Turkish airline buys 10 Canadian Bombardier planes
Turkey's newly established Izmir Airlines (IHY) signed a deal worth 275m Euro
with Canadian aircraft maker Bombardier to buy 10 regional passenger jets for
its fleet, Anatolia News Agency reported recently.
During the signing ceremony for the aircraft, IHY Chairman, Ekrem Demirtas, said
that five of the CRJ900 and Q400 planes would be delivered next year while the
remainder, Bombardier's new "C" series, in 2010. James E. Daily,
Bombardier's vice president for international sales and marketing, said at the
signing ceremony that they have started a long-lasting relationship with IHY, an
airline which he believes to be "young and dynamic." Regarding the
financing of the deal, Demirtas said they would work with Canadian Eximbank and
other Turkish banks. He explained that they preferred to buy new planes instead
of used ones as they gave priority to security and comfort. Izmir's tourism
trade and the city's industry would benefit when IHY begin flights from the
Aegean city, according to Demirtas.
Rabobank gains majority stake in Turkey's Sekerbank
Dutch Rabobank recently announced that it has signed an agreement to buy a
majority stake in Turkey's Sekerbank. Under the terms of the agreement, Rabobank
will begin by acquiring 36.5 per cent for 78m Euro per share, and will
eventually raise its stake to 51 per cent at the same share price, Anadolu News
Agency said in a report.
The acquisition of the 36.5 per cent stake is expected to close after the
summer. The deal for the 36.5 per cent is valued at approximately 91m Euro.
Under the deal, if the public offer fails to retrieve a sufficient quantity of
shares, the pension fund would sell an additional stake that will complement
Rabobank's holdings to 51 per cent.
Rabobank, the only bank with a triple A rating from the rating institutions said
that the acquisition is in line with its international strategy of buying small
groups, or taking a majority share in small groups, with strong positions inside
and outside large cities.
"Rabobank will acquire a majority stake in Sekerbank and will furnish ample
capital to finance the future growth of the bank," the Dutch group said in
a separate statement issued recently.
With Rabobank, Sekerbank would be linked to a really committed strategic
investor with the best reputation. Hasan B. Goktan, chairman and general manager
of Sekerbank, explained that Sekerbank wants to be perceived by clients as the
most trusted bank to handle their financial transactions. Rabobank said
Sekerbank would have a particular focus on retail business, mortgage lending,
SMEs and an affinity with the local food and agribusiness sector.
"Our aim is to develop local community banks which operate close to their
clients, with a particular focus on the non-metropolitan areas," said Harry
de Roo, member of the managing board of Rabobank International.
Sekerbank was established in 1953, with the mission of intermediating between
the government and the domestic sugar beet sector, making payments and providing
cash advances while Rabobank has been present in Turkey since 1996. The Rabobank
Group is the largest financial service provider in the Dutch market, with
domestic market shares ranging between 25-40 per cent, according to the report.
Capital Intelligence upgrades Turkey's ratings
Capital Intelligence recently raised Turkey's long-term foreign currency and
local currency ratings to BB-minus, from B-plus, and affirmed its outlook as
stable, reflecting Turkey's strong economic performance and declining fiscal and
debt ratios. The Turkish economy enjoyed a third year of high growth in 2004,
with real gross domestic product (GDP) rising by 8.9 percent, and should expand
by six per cent this year and 2006, the rating agency said, Deutsche
Presse-Agentur (dpa) reported.
Inflation was at its lowest since the early 1970s, supported by relatively
prudent fiscal and monetary policies and fast productivity growth, while the
Turkish central bank's implicit inflation target of below eight percent by end
of the year was within reach.
While strong domestic demand growth and high oil prices have pushed the external
current account deficit above five percent of GDP, a confidence-driven pick-up
in private capital inflows has kept the balance of payment in surplus and
enabled the central bank to accumulate a record level of foreign exchange
The public sector deficit fell for a third year in 2004 to 6.2 per cent of GDP
while the primary balance saw a record surplus of 6.8 per cent of GDP.
Expenditure management improved, tax administration was stepped up and the
budget constraints of state enterprises hardened. The outlook for public
finances was favourable, Capital said. Budget over-performed in the first five
months and was on course to meet the primary surplus target of 6.5 per cent of
GDP for the year.
Shahdeniz gas field to meet 15% of Turkey's needs in gas
Shahdeniz gas condensate field is expected to meet 15 per cent of Turkey's needs
in gas (43,185 billion cubic metres) until 2020, Botas company told Azertaj
In 2007 Turkey is expected to buy 24 billion cubic metres of gas from Russia,
9.5 billion from Iran and two billion from Azerbaijan. Turkey is seeking to get
some gas through transit of gas from Azerbaijan, Iran, Russia, Kazakhstan,
Turkmenistan, Egypt, Syria, and Iraq to the European countries. The
intergovernmental agreement on laying of 3.4 kilometres pipeline worth 4.6
billion from Turkey via Greece to Austria has already been signed. The pipeline
with 13 billion cubic metres throughput is expected to be put into operation in
2011. In eight-nine years, the pipeline will transport 30 billion cubic metres
of gas from Turkey to Europe.
Akbank OKs 200m Euro loan for Erdemir group
Turkish bank Akbank recently gave a thumbs up to a 200m Euro loan for steel
giant Erdemir and its associate Isdemir. Akbank's Kurtul said, "We are
proud of lending to the Erdemir group, the life and soul of the Turkish
economy." He added that Akbank would continue to back investments of
manufacturers through long-term loans. The signing ceremony was held at Akbank
headquarters. The participants in the ceremony were Erdemir Chairman, Recai
Berber, Erdemir general manager, Kerim Dervisoglu, Isdemir general manager,
Atamer Giyici and Akbank general manager, Zafer Kurtul, and his assistant in
charge of corporate banking, Ziya Akkurt, Anadolu News Agency reported.
Akbank said the steel giants would use the nine-year loan to finance
investments. The loan has a grace period of two years. The investments aim at
modernising and expanding the capacity of Erdemir while transforming Isdemir
into a flat steel producer. Erdemir's Berber stated that the loan would bring
current modernisation and transformation to a new phase. The loan would help to
establish flat steel manufacturing and Turkish industry will no longer depend on
international supplies. Berber said the group would proceed with improvements
already launched at Erdemir and Isdemir.
Thirteen groups including the world's largest steel producers have entered bids
to take part in the privatisation of Turkey's largest steel business,
state-owned Erdemir a Turkey's privatisation agency announced on July 15. The
agency said that eight of the 13 companies or consortiums qualified to bid for
Erdemir, were not Turkish. Companies from Russia, Korea, France, Britain,
Ukraine and Luxembourg have entered bids for the privatisation of Erdemir. Nine
bidders are of foreign origin, while the remaining four are local, including the
Turkish Army Fund Oyak Group.
The bidders included the Eregli Joint Venture Group, a consortium of 23 Turkish
businesses that pooled their resources to offer a bid following intense
opposition in Turkey to Erdemir's possible sale to non-Turkish companies, the
agency said. Among the participants in the consortium are Borusan A.S., MNG
Holding, Kibar Holding and Fiba Holding. Large foreign steel producers such as
Anglo-Dutch steel company Corus, Luxembourg-based Arcelor, Mittal Steel, US
Steel Corp., Russia's Novolipetsk and Severstal have expressed interest in
Erdemir had sales of US$3.3bn in 2004, its most profitable year ever. The
company predicted flat steel production capacity of seven million tons by 2007
and 10m tons by 2010. Final bids for the 46.12 per cent block sale of the
company will be submitted to the privatisation agency on September 26.
Mittal Steel officials have said in the event they are successful in their bid
for Erdemir, the Turkish steel giant will become "Europe's jewel"
regarding its addition to Mittal's production capacity in the European market.
During a business meeting in Ankara, prime minister Recep Tayyip Erdogan on July
14 slammed "Europe's jewel" because according to him, Erdemir has no
influence in the world market. Erdogan said Erdemir was not in a good state and
even faced problems in renewing its technology. He said the company owed its
profitability to conditions in world markets. "So why should the state
carry this burden?" he asked. He stated that as Erdemir has become a tool
for political cronyism, so foreign or local, the highest bidder would take the
company. A further 3.17 per cent stake held by the Turkish development bank in
the steelmaker will be sold off together with the block sale.
Iran, Turkey to revive trade
During a two-day meeting of the Iran-Turkey joint border committee, director
general of the exports and imports regulations department at ministry of
commerce, Abbas Hosseini said that Iran and Turkey will ease the regulations
that delay imports and exports, Anatolia News Agency recently reported.
Hosseini lead an Iranian delegation to Ankara. Both sides agreed at the meeting
to ease control at the transit of goods and open new border markets to revive
Hosseini said the consignments whose weight is below one thousand tons would be
checked on border and no sample will be sent to the related centres in Tehran or
Ankara for checking. He added that both sides are to establish new border
markets to raise trade and expedite economic development in border areas.