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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: 107 - (28/04/06)
Deadly old hatreds resurfacing
The integrity of the Turkish polity is in peril. Violent clashes between Kurds
and security forces re-ignited ancient ethnic divides in Turkey in early April,
jolting memories back to an old problem that still stands as a dangerous block
on the nation's path toward greater prosperity and democracy. After a decade of
calm, at least 20 people were killed in protests, mostly in the guerrilla
battleground of the Kurdish southeast, but also in cosmopolitan Istanbul.
There are thirteen million Kurds, in Turkey alone with a militant minority
wanting independence, a project fired up recently by the success of Iraqi Kurds
in running two quasi-independent enclaves in Northern Iraq.
The government is firm
The government will not give in to violence, Turkish Prime Minister Recep Tayyip
Erdogan said on April 4th, after a week of deadly clashes between pro-Kurdish
protesters and security forces that left 16 people, including children, dead.
"No one should dare to test the power of the state or the nation," the
Turkish leader said, addressing deputies of his Justice and Development Party (AKP)
in a speech at parliament.
Turkey accuses the banned Kurdistan Workers' Party (PKK) of orchestrating the
violence, which erupted in the predominantly Kurdish southeast on 28th March and
spread to Istanbul over the ensuing week. The demonstrations, joined by
thousands of Kurds, followed the funerals of 14 PKK militants killed in clashes
with the army, rekindling fears of a renewal of the ethnic violence of the
1990s.
PKK-led campaign returns
A 15-year PKK-led armed campaign for self-rule in Turkey's southeast left
more than 30,000 people dead. The end of the conflict in 1999, when the group
declared a unilateral ceasefire, was followed by a five-year period of relative
calm. However, the group called off the truce in 2004.
Turkish security forces found 10kg of plastic explosives in a cemetery in
Istanbul's Esenyurt district, the AFP has reported, quoting a statement by the
office of Istanbul's governor. The explosives are said to have been used in the
past mainly by the PKK and a splinter group, the Kurdistan Freedom Falcons.
The PKK, also known by its new name Kongra-Gel, is viewed as a terrorist group
by Turkey, the EU and the United States. "We reiterate our strong
condemnation of all terrorist groups, including the PKK," Deputy US State
Department spokesman Adam Ereli said on April 3rd, also expressing Washington's
regret for the loss of life in protests by PKK supporters. At the same time, the
United States has been urging all sides to exercise restraint. Also EU
Enlargement Commissioner Olli Rehn called on Turkish authorities to
"refrain from excessive use of force."
Creative response by the state
Unusual for Turkish leaders past, Prime Minister Recip Tayyip Erdogan has at
least acknowledged the problems of Kurds. And in confronting the current crisis,
he and his government seem intent on both continuing to appease the EU and
offering hope to Kurds not eager for a resumption of violence through the PKK.
In his speech to AKP deputies, Erdogan said his government would not bow to
terrorists and promised the Kurdish minority more democracy, investment and
reforms.
"While they try to capitalise on hatred and enmity, we will build more
roads, more hospitals, more schools and more workplaces," Erdogan said.
"We will not back down from justice and democracy. We will bring more
freedoms, more democracy, more welfare, more rights and justice."
No country can tolerate violence as a political tool, he added. "Those
traitors have emerged again because they know the ground is beginning to slip
beneath their feet and they have been buried by history," Erdogan said,
referring to the PKK. "These are their final convulsions."
Dismissing criticism from the pro-Kurdish Democratic Society Party (DTP),
Erdogan urged it to declare the PKK a terrorist organisation, saying he would
not meet with the party's leaders until that happens.
"These terrorists are frightened of peace," he said. "They feed
off hate. I am calling on all to take a stand against terrorism. There is a
strong government in place. Those who perceive the state's compassion as
weakness are mistaken."
The DTP, however, blames Turkish security forces for contributing to the
escalating violence. In a statement on April 4th, the party also called for the
removal of a 10 per cent vote threshold that political parties must pass to gain
representation in parliament. Removing the threshold, it said, would ensure a
"fair representation of Kurds" in the national legislature. In
comparison with many nations that use a threshold percentage, it is undoubtedly
high.
Kurds at the crossroads
The protests could continue - just as guerrilla fighting in the southeast
took more than 30,000 lives since the 1980s - until Turkey finally granted full
rights to its Kurdish minority. "This is a genuine reaction of the people,
and it's going to go on until the problems are solved," one observer said.
But the problems, after years of relative peace, are much more complicated:
Kurds seem to be in conflict over whether now is the best time to return to
violent struggle if continued pressure by the EU over Turkey's membership can
bring change more peacefully.
"I neither want state terror, nor terror of any kind," said one young
Kurd, who would not give his name because, as a public school teacher,
discussing politics could cause him trouble. "More than 30,000 people died.
This is enough. There should be a solution."
His comments seemed to reflect a quiet questioning among many Kurds of the
relevance and tactics of the PKK. Some specialists see the protests as a way for
the PKK to have a role amid the ongoing changes in Turkey, which have included
some concessions to Kurds. In recent years, and largely only under EU pressure,
the government lifted emergency rule in the southeast, began compensating Kurds
for losses when Turkish troops razed villages, and granted other cultural
rights.
Many Kurds say that this has not been enough, amid low wages, high unemployment
and lack of foreign investment in the southeast. "So many promises were
made and not fulfilled," said Cihan Sincar, mayor of the town of Kiziltepe,
near the Syrian border, where two protesters were killed.
But a more immediate test seems to be whether the government will also engage in
heavy-handed tactics against the PKK that could both endanger the nation's
desire to the join the European Union and return the country to the violence of
a decade ago. The foreign minister, Abdullah Gul, acknowledged "a thin line
in struggle against terrorism," even as he pledged no mercy for the PKK.
"This thin line lies between the determined display of the state's power
and facilities, the ability to not to be trapped in the plots of the terror
organization, and not to step back from the democratisation process," he
told reporters in the capital, Ankara, according to the state-run Anatolian news
service.
At a minimum, there is the sense here that the gains made by Kurds in these past
years may have been reversed deeply in a few days.
"We haven't seen anything like this since 1994," said Tacettin
Bahadiroglu, 32, owner of a jewellery store in Kiziltepe, as tense and
blue-bereted Turkish soldiers in armoured personnel carriers took up positions
in front of the regional governor's office. Virtually every shop in town had
been closed for fear of new clashes. "It has pushed us 12 years
behind," he said.
The violence has left a wake of anger and bafflement that Kurds said would not
be healed quickly. Sezgin Tanrikulu, a human rights lawyer in Diyarbakir, said
he believed that only drastic, if immediately unlikely, action by both sides
could head off more violence: The PKK should give up its arms and the government
should develop a more aggressive plan to improve Kurds' lives.
******
Meanwhile, there is good news on the economic front, as the following article
from on the spot attests:-
Turkey enjoys record-breaking direct foreign investment
Reduced tax rates, privatisation bids, the start of accession talks with the
EU and economic growth are some of the factors attracting investors to Turkey,
analysts say.
By Allan Cove for Southeast European Times in Istanbul
Growing economic stability, as well as the recently launched EU accession
process, have spurred an unprecedented increase in foreign investment in Turkey,
official statistics suggest. Direct foreign capital inflow into Turkey rose 239
per cent in 2005, reaching US$9.65 billion. Meanwhile, real GDP has risen by 32
per cent and per capita income by 120 per cent over the past four years.
According to the Turkish Treasury Ministry, 9,684 foreign companies and branches
were established by the end of 2005 and around 2,001 foreign investors were in
partnership with Turkish companies. A total of 11,685 foreign companies were
operating in Turkey, active in such industries as manufacturing, real estate,
and wholesale and retail trade.
A report by the Washington-based Institute of International Finance (IIF)
predicts that at least US$11 billion in foreign capital can be expected in
Turkey during 2006. That would make Turkey the leader among rising European
markets in terms of attracting foreign capital, followed by Romania, which is
expected to pull in about US$7 billion. According to the IIF, investors are
drawn to Turkey by reduced tax rates, privatisation bids, the start of its entry
talks with the EU, and by its economic growth -- which is higher than the EU
average.
Political stability has also played a role. After a succession of coalitions,
the November 2002 elections ushered in a single-party government led by Prime
Minister Recep Tayyip Erdogan's Justice and Development Party. In a recent
speech to the Economy Co-ordination Board, Erdogan said his administration had
succeeded in bringing economic stability back to the country after the disarray
of previous years. Along with that stability, he said, came 22.1 per cent growth
and an ongoing improvement in living standards.
Clouding the picture, however, is Turkey's high level of debt -- US$249 billion,
according to the treasury ministry. Moreover, despite aggregate improvement, up
to a quarter of the country's population remains below the poverty threshold,
based on food and non-food consumption baskets. Purchasing power has risen, but
this trend is not divided equally. According to the most recent data on income
distribution, for 2003, the wealthiest 20 per cent of the population receive
48.2 per cent of the national income, while the poorest 20 per cent get 6 per
cent. The unemployment rate, meanwhile, stands at about 11 per cent.
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BANKING
NBG hails Turkish investment as milestone
National Bank of Greece's (NBG) acquisition of a controlling stake in Finansbank,
a medium-sized Turkish bank, could unleash a long-awaited wave of Greek
investment in Turkey, the Financial Times reported on April 4th.
Takis Arapoglou, NBG chairman, called the deal "a milestone" for
Greece's biggest financial group, which led a drive by Greek companies in the
1990s to penetrate emerging markets in the Balkans.
State-controlled NBG's move into Turkey signals that Greek perceptions of
political risk, a leftover from previously hostile relations between the Aegean
neighbours, has now been discounted.
"The NBG deal opens the door for other Greek banks to move into Turkey. We
can expect to see a dramatic increase in investment between Greece and
Turkey," says George Athanassakis, head of research at Egnatia Securities
in Athens.
In Istanbul, analysts said that a massive Greek investment in Turkey inevitably
would have a political dimension and was bound to have an influence on bilateral
relations.
Mahmut Kaya, head of research at Garanti Securities, says: "Given that
Greek-Turkish relations are still extremely sensitive, this increases the
significance of the investment."
NBG agreed to pay 2.3bn Euro (US$2.7bn) in cash for 46 per cent of Finansbank,
and would make an offer for the remaining shares at the same price. The deal
values Finansbank at 4.5bn Euro, equivalent to 3.6 times book value.
The combined group would be the largest banking operation in southeast Europe
with more than 1,000 branches in seven countries and assets of almost 70bn Euro.
The Turkish stock market surged on confirmation of the deal, rising 2.6 per cent
after several days of weakness caused by political controversy over the
appointment of a new central bank governor. The gains were led by the Turkish
banking sector.
Shares in Denizbank, a smaller bank that may be the next target for a Greek
bank, rose more than 7 per cent.
Trading in NBG shares on the Athens stock exchange was suspended recently, but
the banking index rose 1.5 per cent on the news.
Alpha Bank, the biggest private Greek bank, is understood to be considering a
bid for a Turkish bank.
EFG Eurobank, the third-largest Greek bank, which is controlled by the
Swiss-based Latsis family group, last year bought an Istanbul based brokerage
company as a first move into the Turkish market.
Outside the financial sector, two large Greek companies are already involved
with ventures in Turkey. Helleniki Technodomiki, Greece's leading contractor
recently announced a joint venture with Turkey's Enka group to cooperate on a
US$1.5bn construction project in Dubai. Intracom Telecoms, a Greek telecoms
equipment manufacturer, has an option to acquire a 10 per cent stake in Telsim,
the Turkish mobile phone operator, from the Uk's Vodafone.
Turkey's big conglomerates have hesitated so far to attempt investments in
Greece, although several clothing manufacturers have launched brands in Athens.
Husnu Ozyegin, Finansbank chairman, said recently he expected to see the launch
of Greek-Turkish joint ventures in shipping, retailing and tourism as business
confidence improves as a result of the deal with NBG.
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DEFENCE
Turkey to shell out US$10bn on new warplanes
Turkey will shell out US$10 billion for 100 warplanes to boost the nation's
defence forces, ANSAmed reported.
The sum, representing the biggest defence project in Turkish history, was
nominated by Permanent Undersecretary of Defence Industry, Murad Bayar, at the
annual American-Turkish Business Council meeting in Washington. New warplanes
will be substituted for F-16 and F-4 planes, with Turkey deciding by the end of
the year whether to opt for the Joint Strike Fighter, developed with American
leadership, or the EU's Eurofighter.
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ENERGY
Turpas to complete 300m Euro investment in 2006
Turkish oil refiner, Turpas, will this year complete about three quarters of a
US$400m investment plan initially scheduled to last until 2007, according to a
company announcement, New Europe reported.
Turpas, sold to Koc Holding last year launched a US$2.1bn 18-year investment
plan in 1989 and in March the new board said it would press on with the
remaining US$400m.
In a statement to the stock exchange it said 77 per cent of that chunk would be
spent this year. It will also employ 80 new staff to operate its Izmit refinery
and 130 for its Izmir refinery.
Turpas was sold to a consortium led by Koc Holding and including Royal Dutch
Shell in a US$4.1bn privatisation last year. But a court suspended the sale
after a union challenge and is set to review the deal on April 25th.
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FOOD & DRINK
Cola Turka sales up 12% in 2005
Ulker Group's beverage, Cola Turka, one of the most prominent soda brands in
Turkey, increased its sales by 12 per cent in 2005, New Europe reported.
Ulker General Manager, Haldun Erkli, said the sector had increased 36 per cent
with the impact of the economy's improvement. According to information from
Erkli, soda-drink consumption per-person, which is 65 litres in Europe,
increased overall to 36 per cent in Turkey.
Della's top manager said Turkey has achieved a noteworthy development in the
European Union entry process. He also predicted that the country will equal the
consumption rate in Europe in the near future, underlying an increase in
purchasing power.
New product experiments have also performed well in the sector that has resorted
to distributing a variety of packaging alternatives.
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MINERALS & METALS
Erdemir net profit drops on steel prices
Turkey's largest steelmaker Erdemir's net profit fell sharply last year to
193.39 million lira (US$145 million) due to a drop in steel prices in the second
half and a rise in raw material costs, analysts said, New Europe reported.
Erdemir's investment plans of US$2 billion to expand capacity by 2009 are
expected to exert some pressure on the company's results until 2008. Analysts
had expected some impact on earnings as the company was unable to reflect higher
raw material costs in its product prices. Army pension fund Oyak Group took
control of Erdemir at the end of February in a US$3 billion deal after ditching
a plan with Arcelor to buy the stake jointly. The company said sales amounted to
4.16 billion lira last year, of which 838.9 million were foreign sales. A year
earlier the company said it had gross sales of 4.41 billion lira.
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TELECOMMUNICATIONS
Turkcell opens R&D centre
Turkcell, a provider of mobile communications in Turkey, has announced the
opening of its research and development (R&D) operations into a single
location, New Europe reported.
Turkcell said that over 60 engineers dedicated to developing mobile
communications technologies and services will staff the 3,000-square metre
centre. A top company official said that the company will focus on transforming
the way GSM technologies are used by developing new services and features for
its subscribers. For the centre, Turkcell plans to allocate a portion of the
US$350m the company has committed to new investments in 2006 to R&D
operations. Turkcell also expects to license some of the products and services
created at the R&D centre for use by mobile companies in other countries.
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