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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: 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.

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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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