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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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)

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Ahmet Necdet Sezer 

Update No: 110 - (27/07/06)

Turkish-Kazak trade and investment ties mount; but with plenty of scope for more
Turkey has always developed strong relations with the Central Asian Republics since their independence in 1991, including Kazakstan. Turkish companies have been investing in Central Asia for years, even in Soviet times, due to strong geographic, cultural and even language affinities with investments focused on sectors such as food, beverages, oil and energy, banking, retailing and tourism in Kazakstan. This relationship is one that many others from the Muslim world can look to leverage.
In 2000, the trade volume reported between Kazakstan and Turkey was US$465 million which was the highest amongst Turkey's trade with the Central Asian countries. This is set to mount mightily with the opening of the BTC oil pipeline (see next section).
Alarko Holding, a Turkish conglomerate is one of the biggest foreign infrastructure contractors in the Kazakstan Republic. They also Chair the Turkish - Kazak Business Council run under the auspices of DEIK (Foreign Economic Relations Board) a non-profit private sector organization. The Council serves to remove trade bottlenecks amongst the two countries as well as disseminate information on business opportunities in Kazak market. 
In early March, Dubai Bank signed an agreement with Daruma Corporate Finance of Turkey to develop and market Shari'ah compliant corporate finance and merchant banking services which would also be marketed to Turkey's Central Asian neighbours including Kazakstan. This partnership is reflection of Turkey's strength as a partner in helping launch many businesses into the Central Asian markets. Even Shari'ah element is probably more significant to the lenders than any Kazak borrowers - this being a secular nation.
Even with such strong relations, the feeling amongst the Turkish business community seems to be that much more is desired. Yakup Kocaman, a Turkish business journalist comments that, "Even though the Central Asian countries have got very good relations with Turkey, many there say that Turkey has not realized the full potential of its Central Asian opportunities." Perhaps, partnering with other Muslim world investors to enter the Kazakstan market is just the impetus that is needed to boost its trade and investment relations there.

'The biggest event in Turkish history?'
The opening of the Baku, Tbilisi, Ceyhan (BTC) oil pipeline from Central Asia in mid-July is certainly a major event. 
But it is somewhat of a hyperbole to describe it (clearly PR overexcitment),as the biggest event in Turkish history - bigger than the Battle of Manzikert in 1071, when they defeated the Byzantines and ensconced themselves in the Byzantine Empire? Bigger than the downfall of Constantinople in 1453, when the Ottomans replaced the empire for good with their own, based in the renamed city as Istanbul? Bigger than the downfall of their own Ottoman Empire in 1918? Bigger than the assumption to power of Ataturk in 1923 with the proclamation of the secular Turkish Republic? Obviously not.
It is more reasonable to describe the occasion as the biggest official event in Turkey's, as opposed to Turkish, history. The occasion marked the long-awaited completion of a project that is as much about geopolitics as energy. 
But amid the celebrations, questions persist about pipeline security. The world's second longest oil pipeline, inaugurated on 13 July, is running through dangerous and conflict-ridden territory in Central Asia and the Caucasus. Security remains a key concern.
The stakes are sizeable. Stretching 1,760 kilometres, with eight pumping stations and 101 block valves, BTC is the second longest pipeline in the world. The US$4 billion project, completed a year later than originally expected, is projected to have a daily capacity of 1 million barrels. 
The BTC runs through difficult and dangerous territory. Not only does the route pass through forbidding mountains and remote locales, including over 14 seismic faults, but it runs dangerously close to the region's frozen conflicts and hotspots: Nagorno-Karabakh, South Ossetia, the North Caucasus, Abkhazia, Armenian enclaves in southern Georgia and the restive Kurdish regions of southeastern Turkey. 
The wider region of the Caucasus has experienced an episode of sabotage as recently as January, when suspicious explosions in North Ossetia cut off gas and electricity supplies to Georgia. The pipeline also faces threats on the local level. Despite reimbursement and reinstatement of the land from the British Petroleum-led BTC consortium, locals staged frequent blockages during construction, and illegal tapping attempts were found even before oil began to flow in May 2005. 
Faced with a host of potential threats, the BTC consortium has implemented stringent security measures. While there is substantial, tell-tale infrastructure above ground, such as block valves, devices which change the oil's flow direction, the pipeline itself is buried at least a meter underground along virtually the entire route. Once the land above is reinstated, the pipeline right-of-way should look the way it did before construction, making it difficult for potential saboteurs to find its exact location. Large, above-ground structures, such as pump stations, have elaborate security measures, from concrete blast walls to closed-circuit cameras and armed guards. 
These measures may look impressive on paper, but their effectiveness is questionable. A three-week research trip to Georgia and Azerbaijan by one observer found that the rush to finish laying the pipeline had often resulted in security systems that were either not well thought out or badly implemented. 
In one instance, a pump station had been surrounded by security cameras, but the flood lights supposed to complement them had been installed behind the cameras, negating their purpose. Blast walls, although able to prevent truck bombs, are useless against much more likely mortar or grenade attacks. Two layers of reinforced gates are useful to protect the entrance to the facility, but only if they are kept closed. In many cases, local staff flouts security procedures for the sake of expediency. British Petroleum (BP) security personnel have had to begin the re-installation of security measures after the pipeline's completion. 
The pipeline route is also extensively monitored and patrolled. Sensors along the entire length allow for any disruptions to be immediately spotted on a constantly monitored digital map of the pipeline. In addition, a joint agreement between the BTC consortium and the Azerbaijani, Georgian and Turkish governments facilitates patrolling arrangements. Georgia has gone a step further, signing a bilateral agreement with BP to allow for complementary security arrangements. BP field security teams regularly check above-ground facilities and the company employs local Georgians to patrol the entire right-of-way on horseback. 
The conglomerate additionally is operating an extensive community relations program, aiming to maintain a strong rapport with residents living along the route. These residents could form a first line of defence for the pipeline by potentially alerting officials to any suspicious activity. In addition, the agreement provides for patrols by units of Georgia's new 700-member Strategic Pipeline Protection Department (SPPD), outfitted, trained and funded by BP. 
To date, BP has been less involved in security measures for the two other BTC host countries. Azerbaijan has not signed a similar bilateral security agreement with BP, but talks are continuing. Turkey has not indicated that it is interested in such an agreement, preferring to let its armed forces handle pipeline security. 
Long hailed for its geopolitical significance, the BTC pipeline is likely to take on additional prominence in 2007 when Kazakstan begins transporting 3 million tons of oil a year via the conduit.
Georgian President Mikheil Saakashvili at the launch discussed with Turkish Prime Minister Recep Tayyip Erdogan the prospect of buying an additional 2 billion cubic meters of gas from the Baku-Tbilisi-Erzurum pipeline "at reduced prices," the Azerbaijani news agency Trend reported. 
In addition to Saakashvili, Nazarbayev and Azerbaijani President Ilham Aliyev, the Ceyhan ceremony on 13 July attracted four foreign ministers, 16 energy ministers and two deputy prime ministers. Deputy Energy Secretary Jeffrey Clay Sell headed the US delegation. 

Turkish expert expects long-term boost from BTC pipeline
The BTC oil pipeline will give a strong impetus to the Turkish economy, an expert in international power engineering, Necdet Pamir, believes. According to him, the project is expected to be operative for forty years. But the main impetus will be given to Turkey's development only after the first 16-year-long stage is over. 
The second 24-year-long stage will be the most profitable one. Kazakstan's joining the project, which will make it possible to increase Turkey's share of the project's oil, will play a considerable role in it. Also, oil transit by tankers, dangerous for Istanbul's ecology, will be reduced by 25%, the Turkish expert said.

A violent detour in Turkey
Turkey's foreign minister, Abdullah Gul, said in late May that recent violence in Turkey did not presage a return to the "old days" of coups and military rule. One can but hope that he is right. 
In recent years, there has been much debate in Turkey over the conflicts between its secular constitution and many Turks' conservative Muslim impulses. Lately those confrontations have taken some troubling turns. 
In June, a gunman shot five judges in a courthouse, killing one and wounding the others. Initial reports indicated that the assailant , himself a lawyer, was enraged about a decision by the judges that strictly upheld Turkey's ban on wearing head scarves in public buildings. The news further polarized the debate over the role of religion in public life, and the judge's funeral turned into a mass demonstration in support of staunch secularism. 
The outcry was seen as a setback for Turkey's governing Justice and Development Party (AKP), in power since 2002, which supports a greater public role for religious expression. Since the funeral of the judge, however, the motive behind the attack has become increasingly unclear, and sorting out the facts, which should not exclude mental derangement, will take time. 
But the overriding question is: Are the bad old days coming back? 
Turkey's prime minister, Recep Tayyip Erdogan, a pragmatist is also, a conservative Muslim, but he has overseen the pro-Western reforms that qualified Turkey to open membership talks with the European Union. During the reform process, he stressed that more democracy was the best way to resolve Turkey's polarizing issues. He was right, and now is the time for him to reassert that view forcefully. 
The United States can help promote Turkish democracy by using its longstanding ties with Turkey's generals to communicate zero tolerance for military meddling. 
Turkey borders Iran, Iraq and Syria and is an ally of Israel, a member of the North Atlantic Treaty Organization and a candidate for the European Union. The world can ill afford for it to become less democratic. 

Turkey moves to slice taxes for foreigners
Turkey has introduced sweeping tax cuts as it tried to restore investor confidence in its economy and financial markets, battered by an exodus of foreign money amid fears of rising interest rates worldwide. 
The changes, which include the abolition of a 15 per cent withholding tax for non-residents investing in shares and bonds, sparked a brief recovery in Turkish markets, though they later succumbed to another wave of selling in global emerging markets. 
Finance Minister Kemal Unakitan said that the withholding tax for Turkish residents investing in shares and private sector bonds would fall to 10 per cent from 15 per cent. 
"We expect the changes to be approved by Parliament before the summer recess," Unakitan said. Parliament is to begin its summer vacation in early July. 
Unakitan said that the 15 percent withholding tax would remain for deposits and repurchase agreements for Turkish and foreign residents alike. 
Critics of the tax have said the withholding tax discourages investment in Turkish assets, which have been hammered in the recent investor flight from emerging markets amid fears of a credit squeeze in the world's biggest economies. 
Officials said that the tax cuts would not be backdated to Jan 1st when the withholding tax was introduced, but would become effective only after parliamentary approval. 
Political concerns sparked by Ankara's war of words with the European Union over the thorny Cyprus issue have contributed to the sell-off in Turkey, which has lopped nearly 20 per cent off the value of the lira since the end of April. 
Investors fear that Turkey's centre-right government will take an increasingly nationalistic tone and also move away from a tough economic program that has been backed by the International Monetary Fund, as national elections loom in 2007. 
"After comments by the Finance Ministry in recent weeks that there were no plans to abandon the tax, the news indicates the government is keen to improve the attractiveness of Turkish assets for foreign investors in what has become an unsupportive global climate in recent weeks," the analysis agency 4Cast said. 
Yields on the benchmark April 9, 2008, bond fell to 18.98 per cent on Unakitan's announcement, after touching 20.79 per cent recently, but edged back to 19.52 per cent. 
The lira rose more than 2 per cent on the tax news, with the dollar at 1.63 liras, before being hit by renewed selling of emerging markets worldwide that lifted the dollar to 1.69 liras, its lowest level in more than three years. 
The main Istanbul share index closed 1.36 per cent higher at 34,228 points. 
Some analysts were doubtful that the tax moves would have any lasting market impact in the current environment. 
"We commend the government for its bold move, but unless the broader market tone improves and they can address concerns on the political front, we doubt that this move will really turn the market," said Tim Ash of Bear Stearns International. 
Turkey is a candidate for the EU and wants to draw more foreign investment to help close its gaping current account deficit and raise living standards. The country recently approved a cut in corporate tax to 20 per cent from 30 per cent. Ankara hopes that the cuts will help it to compete more effectively against other emerging markets, especially in Central and Eastern Europe. 

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TOFAS receives 75m Euro loan from EIB 

The European Investment Bank (EIB) is supporting Turk Otomobil Fabrikasi AS (TOFAS) with a loan of 75 million Euro to jointly develop and produce with PSA Peugeot Citroen and Fiat Auto small commercial vehicles for the European market, news agency said. 
The project will assist two major EU automotive companies to consolidate their presence in a strategic pre-accession market and help Turkey to build up a modern and competitive industry. 
The loan, part-financing for total investments estimated at 400 million Euro will result in an important expansion of the company's production capabilities and create some 5,000 new jobs, it was reported. The vehicles will be produced at Tofas' manufacturing plant in Bursa with an additional annual capacity of 135,000 cars. 
TOFAS is Turkey's car-making pioneer and is listed on the Istanbul Stock exchange. The company was established in 1968 as a Turkish-Italian cooperation venture to manufacture passenger cars and light commercial vehicles under licences from FIAT Auto SPA co-owned by KOC Holding AS, a major Turkish conglomerate and FIAT. TOFAS currently has an annual production capacity of 162,000 vehicles.

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Turkey opens pipeline to skirt Russia

Turkey recently inaugurated a US$4bn pipeline carrying oil from the Caspian Sea to the Mediterranean, part of an energy corridor vital to Western and Turkish strategic interests, the International Herald Tribune reported.
The Baku-Tbilisi-Ceyhan project, strongly backed by the United States, is designed to bypass Russia and to reduce Western dependence on oil from the Middle East.
Heads of state from Turkey, Azerbaijan and Georgia were joined by ministers from around the world for a ceremony at the port of Ceyhan to mark the opening of the 1,770 kilometre, or 1,106 mile, pipeline.
"The BTC project is crucial to creating a reliable energy corridor between producer and consumer countries," the Turkish prime minister, Tayyip Erogan, said.
BP, the main partner in the consortium running the pipeline, said that it expected its capacity to reach one million barrels a day by 2008, mainly by carrying shipments from Azerbaijan. In June Kazakstan officially joined the venture.
"This is a historic moment," said John Browne, the chief executive of BP. "It changes the energy map of the world."
Ceyhan, on the Mediterranean coast, is already the terminal for a pipeline from Iraq's Kirkuk fields and with a planned line from the Black Sea city of Samsun, it is expected to account for 8 per cent of global capacity in crude oil trading. It also bypasses the shipping bottlenecks in the Bosphorus Straits, where crude-oil shipments in the winter can be held up for weeks by poor weather and congestion.
The pipeline loaded its first cargo in June, after delays of more than a year. It loaded 213,000 barrels a day in July.
The Baku-Ceyhan project is one of a series of oil and gas pipeline ventures that are set to increase Turkey's strategic importance to Europe as an energy corridor over the next decade, as well as meeting domestic energy demand.
Europe has been especially keen to develop alternative supply sources since a dispute between Moscow and Kiev disrupted flows of Russian natural gas through Ukraine in January.
Turkey has attracted growing interest from foreign investors looking to benefit from its rapidly growing market, bolstered by the start of its membership talks with the European Union.
Turkey, NATO member, also plays an important role in security terms because of its borders with neighbours including Iraq, Iran and Syria. Its growing role as a conduit of energy adds another dimension to its strategic importance.

Nabucco pipeline gas to come 

Energy ministers from Turkey, Austria, Hungary, Romania and Bulgaria have agreed with the European Commission to accelerate building the Nabucco gas pipeline from Iran to Europe via Turkey, New Europe reported recently.
The agreement was signed at the end of a ministerial conference on Nabucco that took place in Vienna and will involve five companies: Botas of Turkey, Bulgargaz of Bulgaria, Transgaz of Romania, Mol of Hungary and the OMV Gas of Austria. They are forming a joint venture called Nabucco Gas Pipeline International.
The European Union aims for 10-15 per cent of its gas to come from this region by 2025, partly in order to reduce dependence on Russia, which threatened Ukrainian supplies earlier this year. "The Nabucco Gas Pipeline is one of the most important European Energy Projects, which allows the EU to diversify its transport routes and gas supplier countries," President of the EU Energy Council, Dr Martin Bartenstein, said.
The Nabucco pipeline, which runs from Iranian fields in the Caspian basin through Turkey to Bulgaria, Romania, Hungary and Austria, was identified as one of the priority projects of common interest under the guidelines for Trans-European energy networks. It could deliver annually between up to 31 billion cubic metres of natural gas to the EU markets.
Energy Commissioner Andris Piebalgs said: "Gas is essential to the European economy. The European Commission is actively guiding investments into transmission and is hoping to assist in overcoming the technical and commercial issues involved in bringing gas through many jurisdictions to the EU."

Gaz de France eyes IGDAS tender 

The privatisation of the Istanbul Gas Delivery Corporation (IGDAS) and the international natural gas pipeline project of Turkey and Austria are garnering attention from French companies, which are also interested in Turkey's nuclear program, news agency said recently.
Turkish Minister of Energy and Natural Sources, Hilmi Guler, said that at a meeting with French Minister of Foreign Trade, Christine Lagarde, main energy projects were discussed and French Gaz de France showed its interest in Turkey's gas market.
Abundant gas resources in the Caspian and Middle East regions are slated to be dispatched to Europe via the Nabucco project. 
Mentioning a previous project, the Baku-Tbilisi-Ceyhan pipeline, which would bring Caspian and Kazak oil to the world market, Guler said: "Turkey is no longer a transit country for energy since these projects turn Turkey into a terminal." Turkish Botas, Bulgarian Bulgargaz, Romanian Transgaz, Hungarian MOL and Austrian OMV gas companies in June 2005 signed a Joint Enterprise Contract at Nabucco's general company meeting in Vienna.

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Putin discusses energy with Sezer in Moscow 

Russian President, Vladimir Putin, met with Turkish President, Ahmet Necdet Sezer, in Moscow to discuss burgeoning energy cooperation between the countries, Deutsche Presse-Agentur (dpa) reported. 
Projects for the transportation of Russian gas and oil via Turkey to world markets were a key agenda item with Sezer, who arrived in Moscow on a three-day visit. 
Russia delivered 18 billion cubic metres of natural gas to Turkey in 2005, including five billion via the Blue Stream gas pipeline running under the Black Sea, according to the Kremlin. The Gazprom gas monopolist is considering using the Blue Stream route in a future export pipeline to Southern Europe to supplement the North European Gas Pipeline (NEGP) that is now under construction. 
The presidents were also expected to discuss Russian participation in Turkey's nuclear energy programme, as well as intensification of bilateral trade, which last year reached US$15 billion. Turkey is Russia's sixth-largest foreign trade partner.

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Economic cooperation boost with Macedonia 

Turkish Prime Minister, Recep Tayyip Erdogan, met recently with his Macedonian counterpart, Vlado Buckovski, in Skopje on a two-day visit to discuss economic cooperation, among other issues, New Europe reported.
The two premiers' talks focused on enhancing cooperation in economic, commercial, military and cultural areas, it was reported. 
Erdogan was cited as saying that economic and commercial relations have improved between the two countries and that Turkey aims to further increase trade and cultural development with Macedonia. He also showed his support for Macedonia's NATO membership bid. The two confirmed their countries' relations are good, but that economic cooperation can be boosted. Buckovski welcomed the Turkish premier's statements and the two signed a cooperation agreement between institutions for standardisation.

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Joint trade with Italy to reach US$15bn in 2006 

The trade volume between Turkey and Italy should rise from US$13.1 billion, recorded last year, to US$15 billion this year, Italian news agency ANSA reported. 
The prediction came from Turkish State Minister, Kursad Tuzmen, during his meeting with Italian Minister for European Union Affairs, Emma Bonino, in Ankara. Tuzmen noted that Italy is ranked the third country in Turkey's import and export figures, adding that the economies of the two countries complement each other, it was reported. "We can share world trade like we share a common sea," Tuzmen was quoted as saying. "The trade volume between the two countries was US$4.9 billion in 1999. This figure increased 170 per cent between 1999 and 2005." According to Tuzmen, Italy can "use Turkey as a stepping stone to open to Middle East and Asia," while Turkey can "benefit from Italy to open to European countries." 
In return, minister Bonino said that Turkish cities - especially Istanbul and Ankara - as well as Aegean region were well recognised in Italy. Italy was attempting to encourage its businessmen to invest in the south-eastern city of Gaziantep and the central Anatolian city of Kayseri.

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Steel companies may violate EU free trade agreement 

Veysel Yayan, general secretary of the Turkish steel producers' association (TSPA), has slammed claims that the country's steel industry had broken the terms of the 1996 Free Trade Agreement with the European Union, news agency said.
A number of southern European steelmaking associations said they have taken preliminary steps towards filing anti-dumping complaints against imports of rebar from Turkey as a result of the alleged breach.
"There is no longer any state aid to the Turkish steel sector aimed at increasing the country's hot rolled capacity," Yayan claimed. "We accepted this condition in order to gain membership of the European community, even though many countries that are already members still have subsidies for their own industries." 
Some EU mills have claimed that export subsidies had allowed Turkish rebar rollers to operate at a cost advantage and had caused injury to domestic markets. But last year's exports of Turkish steel to the European Union fell by 20 percent overall, while reverse traffic of steel products was almost twice that level in terms of value, according to TPSA figures.

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