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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: 094 - (24/02/05)

Rice reassures Turkish leaders on Iraq
US Secretary of State Condoleezza Rice told Turkish leaders that Washington is fully committed to a unified Iraq. She wrapped up a two-day visit to Ankara on Sunday, 6th February, aimed at reassuring officials concerned about ambitions by some Kurds to create a Kurdish region in Iraq, with Kirkuk as its capital. She told a local TV channel that Washington would not ignore "any kind of terrorism stemming from Iraq".
Following his meeting with Rice, Turkish Prime Minister Recep Tayyip Erdogan said relations between Turkey and the United States are at a "positive and mature point". Rice met with President Ahmet Necdet Sezer and Foreign Minister Abdullah Gul before heading on to Israel. 
Actually, relations with America have cooled since Turkey refused to let US troops attack Iraq from its territory in March 2004; blunt comments from Mr Erdogan have harmed those with Israel, another ally. 
Nevertheless, the Erdogan-Rice meeting may prove a breakthrough. It was noted that they discussed Afghanistan, Iraq, the Middle East, and Cyprus but did not touch on the issues of Iran and the Incirlik air base. 
Turkey's concerns over recent developments in Kirkuk were also relayed to the US. According to sources, while Erdogan spoke of Turkey's sensitivities regarding Kirkuk to the visiting US Secretary of State, he also emphasized that he was speaking as a "friend and ally". Rice, on the other side, stressed that Kirkuk belongs to the whole of Iraq and its future will be determined by all Iraqis: "There will be no permission for any excessiveness in the city. The Iraqi administration will not allow for any excessiveness. That's why we have been working for an election to be held and democracy to be consolidated." 
Rice also conveyed that they know of Turkey's sensitivities in all issues and will continue the "dialogue of strategic co-operation". Signifying that they want good relations with Turkey, Rice noted that they have been working to end the isolation of the Turkish Republic of Northern Cyprus (TRNC). 

AKP totally dominant
The Justice and Development Party (AKP), which came to power in the November 2002 election, as Turkey's first single-party government in 15 years, has changed the political landscape. Under Premier Erdogan-who belatedly became prime minister in March 2003-the conservative AKP has hit on a winning formula. 
It has undertaken ambitious reforms with the long-term aim of Turkey joining the European Union. These have weakened the country's meddlesome generals and reversed decades of corruption, economic mess and authoritarian abuse of power. Turkey's 14m Kurds, who secured an interim constitution in March 2004, have been among the main beneficiaries. Turkish-Cypriot support for a UN-backed reunification plan for the island (it was the Greek Cypriots that voted it down), also aided Turkey's European aspirations, and in October 2004 the EU recommended the opening of membership talks. 
Western states remain suspicious of the depth of Turkey's reforms and fear that its prime minister (and his equally pious wife) will put the country on a more Islamic path. But a personal friendship between the Turkish and Greek prime ministers could improve relations between the two traditional enemies.

OECD positive about the economy
The Organisation for Economic Cooperation and Development (OECD) states that it envisages annual growth of GDP at 5.7% between 2006 and 2009. 
The rate of inflation has come right down into single figures, where it is likely to remain. But the rate of unemployment is likely to continue to hover about 10%.
The Turkish economy needs a new dispensation and that is still likely to be from closer association with the EU.

EU membership the main issue
Turkey's EU membership continues to be a hot topic on the international agenda, triggering the unconcealed doubts of some Europeans as to how "Western" the country really is. Turkey has a lot to gain from its membership, politically, economically and strategically. Joining the EU would bolster Turkey's civil society and democracy bringing a definite end to the era of military interventions; accord her a more privileged place in the Islamic world; diminish the state's role in the economy and the state's centralizing command over the society; render Turkish Armed Forces a significant part and parcel of any European Army; and provide many young Turks access to new opportunities for better education. A number of European politicians seem to contend that this is too much to bestow to a country whose position in the map of civilizations is still notoriously dubious. 
Turkey might have a lot to gain from her full membership but so has the EU much to gain from her inclusion. Once the Baku-Ceyhan oil pipeline is completed, the EU will have one less worry about her energy needs. Given that the EU is Turkey's number one trading partner this large, dynamic, and young society will provide an important market for Europe and will further help to overcome the paucity in Europe's labour, land and natural sources. Furthermore, it is apparent that in the years to follow the world's mapping will shift again, as it has many times in history, and the Middle East will attain enormous importance in shaping both international and domestic politics. Within this framework, Turkey's full membership will help the EU to strengthen its hand regionally and globally, furnishing it with a more credible role vis-a-vis ethnic, religious and national tensions around the world. After Turkey's inclusion the Islamic world would have a better view of the EU and hopefully, the EU will have a better view of Islam. 
It is a truism that there is an ongoing clash today. But unlike what many like to think, this is not a clash of civilizations between Islam and the West. It is not a clash between an imaginary Turkishness frozen in time and an imaginary Europeanness thriving upon homogeneity. On the one hand are those who want to live a life primarily, if not entirely, surrounded by people who are like them, who think and act and dress and talk and pray just like them, who are each other's mirror images. On the other hand are those others who are more cosmopolitan, more ready to welcome ethnic, religious, national diversity, those who are not so obsessed with their mirror image. The clash between these two mentalities is an ongoing tension that recognizes no map, cutting across national, geographical and religious boundaries. 

Foreign minister Gul in Israel
Turkish-Israeli ties have weakened in recent times, in part due to Tel Aviv's hard line against the Palestinians. Restoring ties between Ankara and Tel Aviv and restarting the Middle East peace process topped the agenda of Turkish Foreign Minister Abdullah Gul during his three day visit to Israel and Palestine recently.
Gul held meetings in Tel Aviv with Israeli President Moshe Katsav, Prime Minister Ariel Sharon and Foreign Minister Silvan Shalom. He also met with Palestinian leaders. In late December, Turkey offered to act as a mediator in the Middle East Peace Process, saying that its good relations with all parties involved could help promote an end to the instability in the region

Turkey, Russia celebrate trade ties, while probing an expansion of geopolitical contacts 
Russian President Vladimir Putin hopes that trade with Turkey will rise by 50 per cent in the near future, hitting US$15bn. He expressed this hope on January 11th at a meeting with Erdogan, who arrived in Moscow on that day for a three-day working visit. 
"Your and our best suppositions on the development of relations in the economic sphere have come true," the Russian head of state said. "I agree with forecasts that trade may reach US$15bn in the near future." Suggesting to concentrate at the talks "mostly on economic cooperation", Putin noted that "energy and transport are priorities" in this sphere. He specified that he had in mind "the power industry, supplies of raw materials and construction of infrastructure projects". 
The Russian leader reported at the same time that he would also like to discuss the development of military cooperation. "We had plans in this sphere, and I should like to say a few words on this topic," the president said, adding that he also intends to speak on social issues. 
In turn, the Turkish premier claimed that Moscow and Ankara should develop the tourist industry. "Along with the development of trade and economic relations, the development of tourism gives a chance to the peoples of our countries to learn better each other, and prospects for rapprochement emerge," he noted. 
Erdogan noted that trade rose to ten billion dollars in 2004. "I believe that we shall score new results in a very short period of time," the Turkish premier continued. He held that "this process will accelerate even more, thanks to investments in Russia and Turkey as well as in third countries". 

Turkey's revolution
During his speech at a press conference in Moscow, Turkish Union of Chambers and Commodity Exchanges head Rifat Hisarciklioglu stressed the importance of the 'entrepreneur middle class' in improving nations' economies. 'The Soviet Republic collapsed because there was no entrepreneur middle class to act as the engine of the economy,' he said. 'Since Turkey has reached the capacity to create such a class, its exports, which was two billion dollars in early 1980s, has today reached to US$63bn. He gave the following figures: 'The number of our industrialists was about a thousand, and nearly all of our exports were agricultural products. Today, 85% of our US$65bn exports is industrial products. We have 25 thousand industrialist companies and 40 thousand exporters.' Therefore, today Turkey is more developed, free and powerful than the past! 
Transition to a middle class society is also changing our political culture. 'Let the state do it,' we said for ages, but today 'Don't let the state intervene,' we insist. The strengthening of the middle class is also improving its ethics and artistic taste. We know that transparency is the most effective measure against corruption. More developed Turkey means more decent Turkey. 
Turkey must trade in US$8bn more services and products to the Russian Federation in order to reach a balance of foreign trade. According to State Minister Kursad Tuzmen, our target is US$150bn. Our entrepreneur middle class will grow bigger, and will pave the way for more employment and production, and then sell these products to the world market. 
'We want nothing from the state,' Hisarciklioglu said. 'The state should only make the structural reforms. It should take effective measures to crack down on unregistered economy. Briefly speaking, we want the state to establish a political and economic structure similar to that of the developed countries. We will then be able to compete with the giants of the world, and our country then will become one of them!' 
Turkey's future depends on the self-confidence of the middle class. Turkey is on the right track.

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BANKING

Sabanci to sell 1.4% of Akbank stake


The Sabanci family, one of Turkey's wealthiest currently owns 18.4% of Akbank, Turkey's biggest bank by market value and part of the Sabanci industrial group. Akbank recently declared that Sabanci will sell 1.4% of Akbank to foreign institutional investors in a deal worth 123m Euro. The share sale in the Istanbul Stock Exchange wholesale market was scheduled for January 26th at a per share price of 7.90 Turkish liras (5.86 Euro), Anadolu News Agency reported. 
The deal which responds to demand from foreign institutional investors to increase their holdings in Akbank, will amount to 165.9m Turkish liras (123m Euro). Akbank shares fell 2.9%, a 0.4% decline in Istanbul blue chip index. "Although it might have a negative impact on the short-term market performance of the stock, for the medium term it is positive as it increases the free float," said Oyak Securities' Figen Cevik. Akbank's free float should increase to 33.65% through this transaction, she added.

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CONSTRUCTION

Soyak plans to build 4,000 houses in Izmir

Building contractor Soyak Yapi Insaat Sanayi plans to build and hopes to sell 4,000 houses in Izmir in 2005, assistant general manager, Aybars Kizilsencer, said, Anatolia News Agency reported.
During a meeting introducing company plans for 2005, Kizilsencer said they plan to enter the Izmir housing market. "Our target for 2005 is to get out of the borders of Istanbul. Izmir is our first choice. We will build 2,000 houses in Karsiyaka. All necessary work and planning have already begun. We hope to start selling come summer." Kizilsencer noted that the company had a very successful year in 2004 and that the goal is to carry this success into 2005. "Last year we had revenues totalling 250m Euro. We are planning to increase this figure to 550m Euro in 2005," Kizilsencer said. "In addition to those in Karsiyaka, we also plan to build 2,000 houses along the Canakkale highway, putting the total of houses we plan to build and sell in Izmir alone at 4,000 in 2005," said Kizilsencer. Stating that the price and other details of the houses to be built in Izmir will be released over the coming days, Kizilsencer said they are trying to make them available to the masses.

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CREDIT RATINGS

Fitch upgrades Turkish credit rating

International ratings agency, Fitch, recently said it raised several of its credit ratings on Turkey. Fitch upgraded Turkey's sovereign credit rating to BB- from B+, still a speculative grade, but the firm said fiscal policy discipline and a start to European Union accession talks contributed to the move, Anatolia News Agency reported.
Fitch's decision to raise Turkey's long-term foreign currency and local currency ratings brought with it a decision to move its outlook to stable from positive. "The upgrade is driven by prospects for continued policy discipline, underpinned by domestic political stability, the adoption of a new International Monetary Fund (IMF) reform programme and the approach of European Union accession talks scheduled for October 2005," the agency said.
"Government commitment to structural reforms and fiscal consolidation will help cement the macroeconomic improvements of the past two years, encouraging more predictable and sustainable growth, but there are formidable hurdles ahead and the government will have to make tough decisions," added Nick Eisinger, director in Fitch's Sovereign Group.
Fitch noted that the general government budget deficit is expected to come to six per cent of gross domestic product (GDP) this year, down from eight per cent in 2004. Growth in 2005 is forecasted at 6.8 per cent. The agency said its ratings upgrade also reflected central bank success in lowering inflation, which came to 9.3 per cent in 2004, below the official target for the third year in a row. It added that the eight per cent inflation target for 2005 is "challenging but achievable."
Fitch said in its report that Turkey's "large and relatively unfavourable external financing mix" leaves the economy exposed to shocks and possible rises in global interest rates.

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ENERGY

2004 electricity output up 6.8%

Turkey's electrical energy output rose 6.8% year-on-year to nearly 150bn kilowatts per hour in 2004, according to latest data from the energy ministry. Electricity production of thermal power plants went down 0.9% to 103.777bn kWh, accounting for 69.2% of the total output. The production of hydroelectric power plants surged 30.4% to 46.049bn kWh, representing 30.7% of the entire output. A total 52.6% of the total electrical energy was produced with imported fuel and the public sector accounted for 45.4% of the electricity generated in the country, up from 44.9%. Turkish electricity output rose by 6.9% year-on-year to 13.838bn kWh in December 2004, Anadolu News Agency reported.

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FOREIGN ECONOMIC COOPERATION

Canadian PM talks energy with Turkey

On a recent visit to tsunami-hit Thailand, Canadian Prime Minister, Paul Martin, made a brief stop in Ankara to discuss possible energy projects with Turkey. Turkish Energy Minister, Hilmi Guler, said after meeting with Martin that Canada was willing to invest in energy projects in the country, Anatolia News Agency reported.
"They are particularly interested in hydroelectric and coal power plants," Guler said. Ankara is also planning to build three nuclear power plants over the next few years that should become operative from 2011 to avoid a possible energy shortage. In 2000 Canadian company AECL vied with Westinghouse of the United States and NPI of France in a tender to build a nuclear plant on Turkey's southern coast, but Ankara abandoned the project amid financial troubles and protests from environmentalists and neighbouring countries.

Turkey, Ethiopia sign civil aviation, road transport deal

Turkey and Ethiopia on January 14th signed an agreement in civil aviation and road transport and resolved to improve bilateral trade through a joint ministerial economic commission, Deutsche Presse-Agentur (dpa) reported.
The agreement was signed between Turkish Transport Minister, Binali Yildirim, and Ethiopian Trade and Industry Minister, Fantaye Biftu, at the end of three days talks in Addis Ababa. Both sides had reached a consensus to cooperate in various sectors aimed at promoting trade and cooperation, particularly in the textiles and leather sectors, according to a statement. They also agreed to monitor the implementation of the various agreements reached since signing economic trade and technical agreement in 1993.

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FOREIGN RELATIONS

Erdogan seeks stronger Turkey-Russia relations

On January 10th Turkish Prime Minister Recep Tayyip Erdogan met Russian President Vladimir Putin as he began a 3-day visit to Russia aimed at further improving the economic ties between the 2 ex-Cold War foes. Erdogan told reporters at Ankara airport before flying out that the volume of bilateral trade surpassed 10bn Euro in 2004, setting the new target at 25bn Euro.
Erdogan visited Putin's country residence outside the Russian capital, Novo-Ogaryevo, where both leaders held talks over an informal dinner. "We will have the opportunity to talk about bilateral issues and exchange views about the international situation, and tomorrow we will meet with business representatives," Putin said. The Turkish premier, who was scheduled to meet Putin for further talks the following day at the Kremlin, welcomed the strengthening relations between Ankara and Moscow. "My arrival here comes a very short time after your visit (to Turkey), which shows the warm ties between Turkey and Russia," Erdogan said, Anadolu News Agency reported.
His trip follows a high-profile visit to Ankara in December by Putin, during which the two sides decided to rest tensions that arose from mutual accusations of harbouring terrorists and often marred bilateral ties in the past. Erdogan said: "Cooperation between our countries has recorded serious progress in the past 10 years… Both countries have a strong political will to further improve economic and commercial relations."
Later, he was scheduled to attend a meeting of Turkish and Russian businessmen and inaugurate a Turkish Trade Centre, a 9,000sqm complex of shops and business, in downtown Moscow. Erdogan said cooperation in the field of energy would also be high on his agenda, but did not elaborate.
According to Turkish media reports, Ankara is seeking a new discount in the price of the natural gas that Turkey is importing from Russia via the so-called Blue Stream pipeline, which runs under the Black Sea. Anadolu reported that officials from the two sides are also expected to discuss the possibility of extending the Blue Stream conduit to Israel. The Turkish ministers of energy, foreign trade, industry and labour as well as about 500 business people accompanied Erdogan on his trip to Moscow.

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INFORMATION TECHNOLOGY

Gilat signs deal with IsNet

IsNet, a leading ITC company in Turkey, provides enterprises, organisations and consumers with services, such as Internet, security solutions, co-location, voice communication, web design, software development and IT system maintenance. IsNet on January 20th signed a deal with Gilat Satellite Networks for the supply of a SkyEdge network to include 2 hubs and 1,500 VSAT terminal sites, Anatolia News Agency reported.
The satellite-based remote sites will be dispersed throughout Turkey. The SkyEdge network will allow IsNet to provide data, voice, embedded VPN and video applications to its wide customer base. With a satellite-based network, the IsNet plans on expanding its solution offering throughout its coverage in Turkey. IsNet general manager Ismail Hakki Aksener said, "We look forward to our cooperation and feel that the introduction of VSAT technology will prove to be a positive in the market." On the other hand, Gilat associate for VP sales for Central Asia, Caucasus and Turkey Rudy Colson said: "IsNet is a very important and reputable service provider in Turkey and Gilat is proud to provide the company with the latest in VSAT technology. We believe that due to Gilat's experience in Turkey and the solid support from our local partner Setkom, in marketing, sales and post sales activities throughout Turkey, we are well equipped in providing our customers in the country with superior means of communications."

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TELECOMMUNICATIONS

Two more Turkish firms to take part in Telekom sale

Two more Turkish firms are willing to participate in a tender for a majority stake in state telecom monopoly Turk Telekom, Anadolu News Agency reported.
The deadline for pre-qualification applications expired on January 11th. A subsidiary of leading Turkish mobile phone operator, Turkcell, Turkcell Bilisim, and media giant, Dogan Holding, announced their plans to join the race for a 55% block sale for Turk Telekom, a fixed line operator. According to analysts, it might be worth several billion Euro. Officials have said that the tender which was launched last year in November and was central to Turkey's privatisation efforts under a multi-billion Euro International Monetary Fund (IMF) loan accord, has attracted 13 other expressions of interest, from both domestic and international players.

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