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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: 095 - (01/04/05)

Russia the turnkey for Turkey, as for so many others
Turkey has long been living between the East and the West. But the connotation of these terms has been changing of late. Kipling wrote that: "The East is the East; and the West is the West; and never the twain shall meet." Actually they always have to meet, whether they like it or not, to discuss points of agreement and disagreement.
But what is the East today; and what the West?
It depends where you are. For Turkey the East is the Islamic world; and the West is Europe and the EU, to which it aspires to join. 
But where does Russia fit into the fault-line? 
It is a new Third World, neither Eastern nor Western, but very much part of the picture.
For centuries, Turkey and Russia have been rivals for regional supremacy. Recently, the two countries have realised that friendly relations are in the interest of them both. Accordingly, co-operation rather than rivalry appears to dominate their ties. This development has been welcome by the EU, which sees these countries as the two largest imponderables on the European horizon.
The general understanding is that Russia is a European country while Turkey belongs to Asia, despite the fact that the two vast countries both span the continents of Europe and Asia (although they no longer share a border). The reason for the above distinction is that in both countries the majority of the population as well as the capital city are located on the continent where they are respectively assigned.

Issues:
In December 2004, Turkish Prime Minister Recep Tayyip Erdogan paid a visit to Moscow before Russian President Vladimir Putin reciprocated with a trip to Ankara in January 2005. This sequence of top-level visits has brought several important bilateral issues to the forefront.

· Trade
In 2004, trade between Turkey and Russia was worth some US$10bn. This figure is now expected by both Moscow and Ankara to reach US$25bn by 2007. Russia is Turkey's second-largest trading partner after Germany, while Turkey is Russia's 14th trade partner. Russia exports to Turkey fuel and energy products (72% of total), as well as metals (16%) and chemical goods (4%). Turkey, in turn, sells textiles (30%), machinery and vehicles (23%), chemical goods (15%) and food products (15%) to Russia.
Turkish companies are present in significant numbers in Russia's construction, retail and brewing industries. Russia's investment in Turkey is worth US$350m while Turkey's investment in Russia totals US$1.5bn.
The two countries consider it their strategic goal to achieve "multidimensional co-operation", especially in the fields of energy, transport and the military. Specifically, Russia aims to invest in Turkey's fuel and energy industries, and it also expects to participate in tenders for the modernisation of Turkey's military.
In the strategic energy sector, the two countries are in agreement to implement large-scale projects, some of which compare with the Blue Stream gas pipeline. Among other developments, Russia will increase gas supplies to Turkey and will allow Russian companies to engage in gas distribution in Turkish territory. Talks are also underway on ways to increase Russian electricity deliveries to Turkey.

· European Union
Moscow's initial reaction to Turkey drawing closer to the EU was lukewarm. "If you enter the EU we cannot meet frequently," Putin was reported as telling his host, Prime Minister Erdogan, during the former's visit to Ankara in late 2004. However, at the two leaders' next meeting in Moscow in January 2005, Putin already said that Russia was in favour of Turkey's EU membership, primarily since it promised to open up new trading channels for Russia. ''We welcome Turkey's success at the EU Brussels summit,'' Putin said in Moscow. ''I hope that Turkey's integration in the European Union will open up a new horizon for Russian-Turkish business cooperation.''

· Cyprus 
Regarding the outstanding issue of Cyprus (which is tied closely to Turkey's EU membership bid), Russia has declared support for the plan put forward by UN Secretary General Kofi Annan. ''We will support any resolution that comes out of the implementation of UN Secretary General Kofi Annan's plan," said Putin. He added that the economic embargo on northern Cyprus was "unjust". In April 2004, Russia used its veto to block a resolution that sought to outline new UN security arrangements in Cyprus.

· World Trade Organisation
In return, Turkey's Erdogan has pledged to "fully support" Russia's quest for membership of the World Trade Organisation. "Many barriers in the way of trade and economic co-operation between our countries may undoubtedly be removed after completion of Russian-Turkish negotiations on Russia's WTO entry on acceptable terms," reacted Putin. The EU concluded a deal with Russia on the latter's accession to the WTO in May 2004. Russia may become a full member of the WTO in 2005.

· Chechnya / the Kurd issue 
The conflict in Chechnya remains high on the two countries' bilateral agendas. Many Turks trace their ancestry to the Caucasus, including Chechnya, and they have always been sympathetic towards the Muslim militants in the war-torn Russian region. Earlier, Russia issued calls for Turkey to crack down on Turkish "philanthropic organisations" that allegedly channelled money and arms to rebel groups in Chechnya. In turn, Turkey accused Russia of backing Kurdish rebel groups who have been fighting for autonomy in Turkey's southeastern regions since the early 1980s. The recent rapprochement promises to bring both countries closer to negotiated solutions.

· Caucasus
The Caucasus remains a moot point between the two countries. Turkey's main ally in the Caucasus region is Azerbaijan, whereas Russia's ally is its rival, Armenia, which continues to insist that Turkey committed 'genocide' against its people during World War One. ''We are all aware about the historical problems between Azerbaijan and Armenia. Russia will contribute to the peace process," Putin said. "We do not want negative relations with any of our neighbours, including Armenia," Erdogan responded.

Playing the Albanian card
Premier Recep Tayyip Erdogan is a very shrewd politician. He is determined to advance the idea of Turkey joining the EU one day, but is well aware of the immense hostility this arouses in established member countries, France and Germany above all. To have British support, as Turkey does, is rather a liability than an asset. 
The more recent a country's adhesion to the EU, the more likely it is to be in favour of Turkish entry. The UK joined in 1973. Albania has yet to join; but it is certain to do so eventually after the valiant role it played in 1999 in the Kosovo conflict.
The new countries of Europe can perhaps swing the matter for Turkey, if sufficiently courted. One institution to which Turkey belongs and they don't is NATO, a very good bargaining card. 
The Turkish Prime Minister completed a two-day official visit to Tirana on 16th February. Leading a delegation of businessmen and parliament members, he met with Albanian President Alfred Moisiu, Prime Minister Fatos Nano and other top officials. The countries of Southeast Europe, especially Albania, are a priority for Turkish foreign policy, Erdogan said, pledging his country's support for Albania's goal of joining NATO. "NATO membership of Albania will be very important for Balkan countries," he said, adding that Euro-Atlantic integration would provide the region with a "strategic advantage." 
Erdogan also announced that a Turkish university would be opened in Tirana, with the goal of boosting awareness about relations between the two countries. 
After his meeting with the Turkish prime minister, Nano hailed the visit, saying it demonstrated the high level of bilateral relations. Albania is interested in Turkey's experiences with the tourist sector, Nano said, urging Turkish entrepreneurs to invest in tourist facilities planned for Albania's coastline. 'There are perfect relations in the political and military arenas between Turkey and Albania. These relations should be developed in the economic arena as well," Nano said. 
The two leaders agreed on the need for participation by Turkish firms in the privatisation of strategic sectors of the Albanian economy. To that end, Turkish Transportation Minister Binali Yildirim and Albanian Transport and Telecommunications Minister Spartak Poci signed a maritime co-operation agreement. 
Erdogan's meeting with Moisiu focused on bilateral co-operation, the development of economic relations, and regional issues. Moisiu congratulated him on the EU's recent decision to launch accession talks with Turkey. 
Erdogan also met with Parliament Speaker Servet Pellumbi and Tirana Mayor Edi Rama, and addressed the Albanian Parliament. He then headed for Bosnia and Herzegovina, the second and final stop on his mini-tour of the Balkans. 

The US -Turkish relations in tension 
US-Turkish differences reached a high acrimonious level, when on March 1st 2003, Turkish Parliament shot down a government proposal to let US use its territory to open a second front against Iraq from the north. Since then Turks have remained opposed to US policies in the region. When it appeared that the acrimonious airing of differences between Nato allies USA and Turkey over Iraq had ebbed somewhat, US efforts to 'franchise 'a' Cedar revolution' in Lebanon, to weaken and isolate Syria have brought acute tensions back into the relationship. Turkish President Ahmet Necdet Sezer told media last week that he would go ahead with his planned visit to Syria in mid-April. "Of course, we will go (to Syria)," he said when questioned by reporters at the presidential palace.
Analysts commented that Sezer's visit could be interpreted as support for Syria at a time when it was under mounting international pressure to end its military presence in Lebanon. Turkey largely kept its silence when USA supported by France commanded Syria to quit Lebanon forthwith. 
Ankara has also kept quiet on sale of short-range Russian missiles to Damascus. It would have howled over such a deal in the past. Russian Defence Minister and head of the Russian Security Council Igor Ivanov told Israel's Channel 1 TV recently that Russia is ready to provide assurances that non-portable, anti-aircraft Strelets missiles with a range of 4-5 Kms being sold to Syria would not threaten Israel. 
US ambassador Eric Edelman had urged Ankara to join in for an immediate and complete Syrian withdrawal. "What can be said on Syria is that the international community is completely unanimous on UN Security Council Resolution 1559," which calls on Syria to immediately pull out of Lebanon. "We hope Turkey will join the international community. Of course, the decision to do so lies with Turkey," Edelman added. 
The Turkish Foreign Minister Abdullah Gul explained that his country was fully in line with the UN resolutions as "democracy and the dissemination of freedoms in various parts of the region is Turkey's basic policy." Diplomatic sources in Damascus reportedly revealed that the US administration reacted angrily at the Turkish government's silence over a Turkish people's delegation visiting Syria to voice its support and solidarity with the Syrian people in the face of the US pressures and the Israeli threats.
USA has cautioned, even warned Ankara many times, not to have close relations with Damascus, but Turkey has ignored such threats. Several bilateral high level visits have taken place, the last one was in December by Turkish Prime Minister Recep Tayyip Erdogan. Sezer's visit is in return for Syrian President Bashar Assad's earlier visit to Turkey in 2004, which marked a turning point in the Syrian-Turkish relations.
Syria has begun withdrawing its forces from Lebanon near to its border as laid down in the 1989 Taif Agreement , which had ended the 16 year civil war in Lebanon in which nearly 100,000 people were killed and the nation almost destroyed . Syria had gone in to protect the Christians and the Druzes, now leading opponents of Syria. Last year the US and France made UN Security Council pass resolution 1559, which called for Syrian with drawl and disarming of various militias in Lebanon. 
France became the colonial power in Syria following the First World War, which ended the Ottoman empire and its rule over the Middle East. Paris created Lebanon by detaching it from Greater Syria to give a dominant role to Maronite Christians, who had forged closer relations with France as far back as the Crusades. 
After massive but peaceful demonstrations from anti- and pro -Syrian groups ignited after the assassination of former Lebanese Prime Minister Rafiq Hariri in February, an early morning bomb blast on 19 March morning in the Christian sector of Beirut has rekindled fears of renewal of inter -communal violence and worse.
During the cold war, while Turkey was member of Nato, Syria was a close ally of USSR. But after the collapse of the Soviet Union and the change in the international strategic scenario, especially after the US invasion of Iraq two years ago, Turkey and Syria have come closer. 
In late 1998 Turkey had threatened to invade Syria unless it expelled Kurdish rebel leader Abdullah Ocalan and his Kurdistan Workers' Party (PKK), sheltered in Syria. Ocalan was expelled, caught up by Turkish agents in Kenya, brought to Turkey for trial and is now lodged in a Turkish jail. 
Turkish Foreign Ministry did try to lower tensions when it spokesman Namik Tan told the media on 10 March that Turkey was strongly committed to its strategic partnership with the United States. Rebuffing recent allegations that the ruling Justice and Development Party's (AKP) had helped encourage rising anti-American sentiment in Turkey, Tan stated that Turkey was a friend and ally to the US and that such media allegations had no place in Ankara's relations with Washington
But utterances like the recent one by Defense Secretary Donald Rumsfeld on the 2nd anniversary of US invasion of Iraq do not help either. He told Fox News TV on 21 March that "Given the level of the insurgency today, two years later, clearly if we had been able to get the 4th Infantry Division in from the north, in through Turkey, more of the Iraqi, Saddam Hussein, Baathist regime would have been captured or killed." "The insurgency today would be less," he said. Rumsfeld of course understands little about insurgency, rebellion and war of independence against occupying powers throughout history, Vietnam. Algeria and Kenya being recent examples.

Sezer approves tougher straits protection law 
President Ahmet Necdet Sezer on March 10th approved a new law on the Turkish Straits. The law is designed to reduce the risk of pollution in the Straits by not allowing the passage of uninsured ships in Turkish territorial waters. In addition, ships which fail to meet world environmental standards won't be allowed to pass through the straits. Turkish vessels which don't meet these standards will also be barred. 
All ships except warships and official government vessels (Turkish and otherwise) will have to submit information on their cargo to the Undersecretariat of Navigation. 

Erdogan: "the media served foreign interests in exaggerating police actions" 
Speaking at a press conference on March 10th before flying to Spain to attend a security summit, Prime Minister Erdogan charged that the media had served foreign interests by exaggerating the police crackdown on an unauthorized International Women's Day demonstration in Istanbul, adding that the incident had been blown out of proportion. The media effectively denounced Turkey to the world, he said, adding, "The police may sometimes act in the heat of emotion, but this incident wasn't serious."
Erdogan added that the Interior Ministry was investigating the incident and that such things also happen in Western countries. 

Erdogan attends tubitak meeting 
Speaking at a meeting of the Turkish Scientific and Technical Research Council (TUBITAK), Erdogan stressed the importance of achieving progress in science and technology. Erdogan stated that the defence industry and space work were Turkey's priorities, adding that the government had prepared a strategic framework document to coordinate science and technology with research and development (R&D) efforts.
"This document will lay out our objectives through 2010," he said. The premier also lamented that the resources currently allocated to science and technology were insufficient for the country's goals, but urged the need for patience. 

Gul meets with Georgian foreign minister 
Foreign Minister Abdullah Gul in mid-March met with his visiting Georgian counterpart, Salome Zurabisvili, in Ankara. At a joint press conference, Gul said that Turkey and Georgia were not only neighbours, but also friendly countries, adding that Ankara backed peaceful solutions to conflicts in the country's South Ossetia and Abkhazia regions in line with political and territorial integrity. 
Touching on a number of joint ventures with Caucasian countries, Gul said that the long-awaited opening of the Baku-Tbilisi-Ceyhan oil pipeline was expected later this year. For his part, Zurabisvili stated that Tbilisi attached importance to Turkey's political support in its relations with Russia. She also remarked that Turkey's European Union membership was needed for the region. Meanwhile, the two ministers signed a joint protocol on cooperation against human trafficking. 

Gul to travel to Britain 
At the invitation of his British counterpart Jack Straw, Foreign Minister Gul travelled to London in mid-March for an official working visit. The talks of the two top diplomats focussed on Turkish-European Union relations and the Cyprus issue. In addition, political, economic, cultural relations, as well as the Mid-east issue, were taken up. 
During his stay, the Turkish foreign minister also visited an exhibition entitled "Turks: A Journey of a Thousand Years, 600-1600" at the Royal Academy of Arts. 

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CREDIT RATINGS

Moody's upgrades ratings outlook on Turkey

The Turkish economy and the cost to local authorities of raising funds were given a helping hand recently with an upgrading by Moody's Investors Service, Anadolu News Agency reported.
The credit ratings agency upgraded the outlook on all ratings for Turkey to positive from stable in the light of considerable economic progress since 2001.
Prospects for a significant deepening of economic, financial, and even political integration with the European Union were an additional consideration, Moody's said in a statement. At the same time, Moody's upgraded the ratings on the government's Turkish lira-denominated instruments to B1 from B2 in recognition of improved domestic debt sustainability.
The positive outlook affected the B1 foreign-currency country ceiling for debt, the B2 foreign-currency country ceiling for bank deposits, and the B1 rated bonds and notes issued by the Republic of Turkey, regardless of currency denomination, the ratings agency said.
While it acknowledged that a heavy debt burden and a wide current account deficit remained sources of vulnerability for Turkey, Moody's said its positive outlook reflected both the way the economy has performed, with rapid disinflation, robust investment and increased productivity, and the way it was managed, with political stability and responsibility in macroeconomic management. Moody's ascribed the success of legislating profound socio-political reforms in recent years to the popular quest for EU membership. The EU project would continue to support the continued modernisation and convergence of the Turkish economy, Moody's said.
However, the agency added that Ankara still had to undertake difficult structural adjustments to secure lasting economic stability in addition to making painful political concessions to fulfil its EU ambitions, without any guarantee that these would definitely lead to full membership.

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FOREIGN ECONOMIC COOPERATION

Erdogan in Ethiopia

Turkish Prime Minister, Recep Tayyip Erdogan, held talks recently on bilateral issues with his Ethiopian counterpart, Meles Zenawi, following his arrival in the African country on an official visit. Turkey and Ethiopia agreed to establish a joint business council to advise their respective governments on bolstering economic cooperation, including prospects of promoting Turkish investment in Ethiopia, the two prime ministers said at a press conference, New Europe reported.
Erdogan described the talks with Zenawi as "positive and constructive." "We are committed to contribute to the economic development of Ethiopia," he said, adding that both sides have also agreed to shortly reopen the Ethiopian embassy in Ankara. His two-day official visit headed a large government and business delegation aimed at enhancing economic and trade cooperation between the two countries.

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INFORMATION TECHNOLOGY

Motorola reaps rewards as a real IT solutions provider

Motorola's country manager, Murat Ongor, announced recently the company's 2004 results showed a 300 per cent increase in sales from the year before, Anatolia News Agency reported. The parent company reported global sales rising 35 per cent year-on-year, from 23bn Euro in 2003 to 31bn Euro in 2004.
During a press conference at the Divan Kurucesme in Istanbul, Ongor refused to divulge exact revenue figures or Motorola's share of Turkey's mobile telecommunications market, which grew 30 per cent last year and is projected to surge 10 per cent in 2005. Motorola targets its own sales growth in Turkey this year at triple the market performance.
A telecom analyst in Istanbul said the mobile telecommunications market in Turkey last year was worth 7.4bn Euro. She estimated Motorola's market share at 8-10 per cent, which signifies maximum valuation, the company's sales last year grew from around 245m Euro to 740m Euro. Motorola imports handsets and installs network systems in Turkey.
"We also want to let Turkish people know that Motorola is a real IT solutions provider, not just a mobile phone company," Ongor was quoted as saying. "Innovation is key for us, and Motorola devotes nearly 10 per cent of its revenues to research and development, which says a lot."
Motorola's county manager for personal devices, Yucel Kubanc, painted a clear picture of the company's strategy covering music, design and technology. "We're preparing to implement our cooperation with Apple iTunes, whereby people can download songs from their iPods or computers onto their mobile phones," he said. Kubanc assured that this would be available in a few months, plus top design with RAZR V3, the slimmest phone in the world at 13.9 millimetres is also available.
"So far, Motorola has won PoC contracts with 23 network operators covering 27 countries and territories," said Kubanc. "This includes Turkcell, which now offers PoC services to its subscribers using Motorola's network infrastructure and V400p handsets."
Ongor added: "We prefer to put the Telsim affair behind us." His talk of civil authorities referred to Turkey's banking regulators having taken over Telsim in an attempt to collect part of the six billion Euro in costs to the state from the collapse of Imar Bank, both entities formerly owned by the Uzan family. The state has pledged to pay 600m Euro to Motorola from the expected proceeds of a sale of the GSM operator.

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TELECOMMUNICATIONS

Boost in ADNL use pushes up Turk Telekom's profit

The 2004 results of the Turkish fixed-line operator, Turk Telekom, slated for privatisation this year, were announced on February 18th. The company posted a profit of 2.1bn Turkish liras in 2004, against 1.9bn Turkish liras in 2003. General manager of Turk Telekom, Mehmet Ekinalan, said that sales were 9.6bn Turkish liras in 2004 and 1.5bn Turkish liras settlement from Turkcell after disagreement over interconnection deals was settled in December, Anatolia News Agency reported.
The results of the company further revealed that last year it earned 146m Turkish liras from ADSL (asymmetric digital subscriber line), an increase from 15m Turkish liras in the previous year. According to Ekinalan, there was an increment of 455,000 ADNL users from 57,000 over the same period. The company decided to increase the number of ADSL ports from the current level of 700,000 to two million by the end of the year. The company would accomplish infrastructure investments this year worth 1.1bn Turkish liras, including broadband connections, which became widely available in Turkey in 2004. Ekinalan also said the number of hotspots for wireless internet connections would be raised from 160 to 2,000.

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