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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)

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REPUBLICAN REFERENCE

Area (sq.km) 
780,580

Population 
68,893,918

Capital 
Ankara 

Currency 
Lira 

President 
Ahmet Necdet Sezer 



Update No: 102 - (27/10/05)

Turkey and the EU agree on talks 
Turkey and the European Union agreed to open membership talks in early October, after a tense diplomatic tussle that illustrated all the problems of their partnership. These are still formidable, but a way forward has been found.
After two days of dramatic negotiations, European foreign ministers agreed on terms for talks to start, overcoming Austria's insistence that the EU offer Turkey the possibility of a status less than full membership. After hours of discussion with Ankara, Turkey agreed to the framework proffered for what are expected to be tough talks over the next decade.

Austrian objections overcome for now
"We are at a difficult stage in these negotiations," said Jack Straw, the British foreign secretary, who was leading the talks, after his first morning conversation with Ursula Plassnik, the Austrian foreign minister. "I can't say what the outcome will be." His gloom was a result of the demands by Austria's conservative government, reflecting widespread reservations in Austria about bringing Turkey into the EU. 
The mood surrounding the Turkey talks brightened considerably after the pronouncement by Carla Del Ponte, chief prosecutor for the United Nations international war crimes tribunal, said for the first time that Croatia was "cooperating fully" in catching Ante Gotovina, a fugitive indicted as a war criminal. Austria is a strong supporter of Croatia's own bid to join the EU, and Del Ponte's report opens the prospect for Croatia's membership negotiations to start soon. 
"Agreement has now been reached that negotiations on Turkey's accession to the European Union can and will begin in the very near future," Straw said. "This is a truly historic day for Europe and for the whole of the international community," he said. Straw said Turkey's entry into the EU "will bring a strong secular state that happens to have a Muslim majority into the EU, proof that we can live, work and prosper together."
Foreign Minister, Abdullah Gul, of Turkey headed to Luxembourg in advance of Turkey's membership negotiations.
"We reached agreement; I am going to Luxembourg," Gul told reporters, according to Reuters.
The agreement means Europe keeps its promise, made last December, to open talks with Turkey. The talks, a momentous step in Turkey's four-decade quest for membership, are expected to be long and unpredictable, buffeted by Europe's lingering wariness about embracing Turkey, a vast Muslim nation of more than 70 million, and by Turkey's ability and willingness to adopt the EU's laws and standards.

The US plays a role 
The United States helped pave the way for agreement when Secretary of State, Condoleezza Rice, telephoned Prime Minister, Recep Tayyip Erdogan, of Turkey to reassure him that the beginning of membership talks would not compromise Turkey's role in NATO. The United States has long been a supporter of Turkey's bid to join the EU.
A State Department official who insisted on anonymity said Rice had telephoned Erdogan and Gul and had also spoken to the government of Cyprus. "We have always encouraged accession," the official said. "We are not involved in the process but we can express our interests." 
The possibility of opening negotiations with Turkey had been thrown into doubt earlier this summer by Turkey's refusal to recognize Cyprus, which joined the EU in its last expansion, in May 2004. Countries like France objected that talks with Turkey could not go ahead while it refused to recognize an EU member country. 
Gul had been waiting in Turkey for a sign that European governments had come to an agreement on Turkey's future with the EU. Then Austria dropped its insistence that the EU offer Turkey an alternative status that stopped short of full membership. For two days, Austria, which has a population of just over eight million, had held up the progress of negotiations with the 24 other countries in the Union, which has a combined population of 450 million. 
Austria dropped its objection to a statement that the shared objective of the negotiations was accession by Turkey into the EU. In return, Austria demanded robust assurances that the EU could halt Turkey's membership process if the Union was not ready to absorb another country, especially one the size of Turkey. 
The compromise appeared to be acceptable to Turkey, which had said it would not begin talks unless the goal was full membership.
A second problem emerged when Turkey objected to conditions urging it to adopt EU positions in international organizations like NATO. Turkey feared that this meant it could not block any future application by Cyprus to join NATO. But diplomats said Turkey had been reassured when the EU agreed to make a separate declaration saying that Turkey's security concerns would be taken into account.

The rest of Europe takes a positive line
The rest of the EU warned that rejecting Turkey at this stage would damage the Union's interests and hurt Turkey. EU ministers were under pressure to show that the Union was capable of diplomatic success following the failure to get a European constitution, capped by further bitter disagreement over the budget, still outstanding.
Dermot Ahern, Irish foreign minister, told reporters: "At this juncture, to fail to conclude these negotiations does show a clear sign of paralysis." He said the EU needed to show more leadership and not bend to the whim of public opinion.
Europeans already in the Union have shown a marked reluctance since the last expansion, when 10 countries were admitted, to accept more nations as members. Their reservations were met after the EU issued a joint declaration that Turkey must recognize Cyprus before it can ever join the EU, but since no one had suggested that NATO had a position on the accession talks it could hardly have been such a bromide, but probably a message of Uncle Sam's support.
Turkey first applied for membership in 1959. In 1963, the Ankara Agreement foresaw ever closer trade and economic ties between Europe and Turkey, but only in 1999, at a meeting in Helsinki, was it officially recognized as a candidate state.
The push to have Turkey join reflects increasingly strong trading ties. Turkey is the EU's seventh biggest trading partner and sends about 54 per cent of its exports to the EU.

Russia and Turkey forge new ties on security, trade
Turkey is looking north-eastwards as well as north westwards and is finding a positive response from Russia. Turkish Prime-Minister Recep Tayyip Erdogan's recent talks with Russian President Vladimir Putin suggest that the two Eurasian countries have found common ground on a number of key regional security issues. 
"It's our fourth meeting during the last seven months, and I guess, all of you understand what it means," Erdogan said at a news conference following the July 17-18 negotiations at Putin's summer residence in the Russian Black Sea resort town of Sochi. "Our views totally coincide with regard to the situation in the region as well as to the issues concerning the preservation of stability in the world," Interfax News Agency quoted Erdogan as saying. 
The current Russian-Turkish encounter came after the Kremlin leader's official visit to Ankara in December 2004 and Erdogan's trip to Moscow in January 2005. Last May the Turkish prime minister also attended festivities in the Russian capital commemorating the 60th anniversary of the victory over Nazi Germany in World War II. 
Such a sharp increase in top-level contacts appears to be the result of both countries' wariness toward political turbulence in their overlapping "near abroads" - specifically, in the South Caucasus and Central Asia, the regional analysts say. Both Moscow and Ankara are closely following the geopolitical changes that are taking place in post-Soviet Eurasia - in particular, those brought about by the so called "colour revolutions." In the South Caucasus, the "frozen conflicts" between Tbilisi and the breakaway territories of Abkhazia and South Ossetia, and the stalemate between Azerbaijan and Armenia over Nagorno-Karabakh drive these mutual concerns. 
In public, both Russian and Turkish leaders have stressed their commitment to the peaceful settlement of the inter-ethnic conflicts in the Caucasus. However, a number of Turkish and Russian experts argue that Ankara and Moscow seem reluctant to embrace political changes in the Commonwealth of Independent States' southern tier and would rather support the preservation of the status quo. 
Even before the Putin-Erdogan meeting in Sochi, some regional analysts suggested there might be joint Russian-Turkish attempts to solve the Armenian-Azerbaijani conflict. As Armenia's main geopolitical ally, Russia can be expected to mediate between Turkey and Armenia on a number of issues, they say. 
Russian media reports confirmed that the Nagorno-Karabakh issue was discussed during the Russian-Turkish talks. The Russian government newspaper Rossiiskaya Gazeta reported on July 19 that Moscow had expressed its readiness to pursue the settlement in Nagorno-Karabakh "more actively," and that Ankara had agreed to cooperate on this issue. Furthermore, according to some Russian and Azerbaijani sources, Turkish Defence Minister Vecdi Gonul, who made an official visit to Baku on July 18-21, hinted that Ankara is interested in normalization of relations with Yerevan and discussed with Azerbaijani leadership the prospects of Turkey's participation in the Nagorno-Karabakh settlement. 
At the same time, Turkey appears keen to act as a mediator in the Georgian-Abkhazian conflict. Turkey is home to a sizeable Abkhazian community, and Ankara has established friendly ties both with Moscow and Tbilisi, some Turkish commentators note. 
"We don't want to live in a world where enmity dominates; we need a world where friendship reigns supreme," Erdogan said in Sochi, referring to the urgent need to settle the South Caucasus's conflicts. 
Both leaders, however, appear to share a strong apprehension regarding potential political upheavals on post-Soviet territory. While both Moscow and Ankara understand fully that a huge potential exists for political change in the Caucasus and Central Asia, the Putin administration and Erdogan government are unlikely to welcome the revolutionary transformation of the authoritarian regimes in the region, some Turkish analysts contend. 
Azerbaijan's November 2005 parliamentary elections are a case in point, noted Suat Kiniklioglu, head of the Turkish office of the German Marshall Fund of the United States. For Russia, securing stability in this energy-rich Caspian state is important within the framework of the Kremlin's strategy of preserving its influence in the Caucasus, Kiniklioglu said. But Turkey, too, wants to see Azerbaijan stable, and keep secure the delivery of crude oil via the Baku-Tbilisi-Ceyhan export pipeline, he said in an interview with the Russian Nezavisimaya Gazeta newspaper. 
Similarly, in Central Asia, Turkey and Russia seek to maintain the geopolitical status quo. According to Kiniklioglu, both the Turks and the Russians would prefer to deal with the likes of Uzbek President Islam Karimov and other autocratic regional leaders than face the uncertainty of revolutionary turmoil. A number of Turkish foreign policy experts suggest that Ankara's strategic perspective on Central Asia is much closer to the Russian position than to that of the United States. "Neither Moscow nor Ankara is happy to see US forces in the region," wrote analyst Semih Idiz in the mass circulation Milliyet daily. 
The talk of shared security interests extends to economic issues, too. Bilateral trade and energy issues figured prominently during the Sochi meeting. The two leaders said they aim to raise the trade volume between the two countries to US$25 billion from the current US$11 billion. 
The Russian president signalled that Russia would like to increase energy exports to Turkey. Putin set out plans for new gas pipelines through Turkey to supply southern European markets and also raised the possibility of electric power exports to Turkey and Iraq. Erdogan appeared to welcome Moscow's intention to boost gas supplies to Turkey. "There is serious potential for increasing supplies through the Blue Stream pipeline," the Turkish prime minister said. According to Erdogan, the pipeline has a capacity of 16 billion cubic meters per year, but current supplies amount to only 4.7 billion cubic meters. The 1,213-kilometer Blue Stream gas pipeline under the Black Sea was completed in 2002, but has since been a source of dispute between Russia and Turkey over gas prices. 
Most Russian and Turkish commentators give a very positive overall assessment of the Putin-Erdogan meeting's outcome. The rapid rapprochement between the two Eurasian powers could serve as useful leverage for boosting each country's geopolitical stature, they argue. 
The strengthening of cooperation between Russia and Turkey "adds significantly to our country's international prestige," noted one Russian commentary posted on the Politcom.ru website. Many Turkish experts seem to agree. Argued Milliyet foreign policy columnist Idiz: "It may be an exaggeration to call our bilateral relations 'strategic partnership,' but Turkish-Russian relations have already grown in importance to the extent that they affect the entire region."

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ENERGY

Turkpetrol signs deal with Shell 


Turcas Petrol, operating in the fuel oil distribution sector under the brand of Turkpetrol, announced the establishment of a joint enterprise company with British based global fuel oil giant Shell Turkey for Turkish activities, Bloomberg reported.
According to the signed partnership contract, Turcas will have the right to withdraw from the joint enterprise after the necessary evaluations are made. The contract between the two companies outlined the steps that can be taken in case of such a separation. Shell guarantees to buy out Turcas' 30 per cent participation share in the joint enterprise, which is planned to be established in exchange of 150 million Euro. Turcas will have a share of 30 per cent and Shell 70 per cent in the new company. However, Turcas expressed some concerns on the possibility that the expected income cannot be obtained. The new enterprise will operate in retail, commercial sales, marketing and distribution of fuel oil and mineral oil. 

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FOREIGN ECONOMIC COOPERATION

India-Turkey trade to exceed US$1.5bn 

Turkish Ambassador to India, Hasan Gogus, recently stated that the current dialogues between India and Turkey for promoting bilateral trade might lead to growth of trade volume. This was announced on the sidelines of a programme which announced the entry of Turkish hazelnuts into the Indian almond market. Gogus predicts that bilateral trade is expected to reach US$1.5 billion this year, Anadolu News Agency reported. 
Gogus added that the trade between the two countries, in favour of India has increased substantially from US$250m two years back to US$1.2bn in 2004. Turkey exports machinery, construction materials, textile and electrical items to India, while India docks pharmaceutical products, chemicals, textile yarn, automobile parts to Turkey. Taking into account the zero duty benefit in Turkey, Gogus said Indian investors in steel, petroleum, textile, leather and jewellery sectors could invest in Turkey.

Syria, Turkey target better ties 

Turkish Deputy Foreign Trade Minister, Tonger Kayalar, and Syrian Minister of Economy and Trade, Amer Hosni Lutfi, met in Ankara recently to discuss the implementation of the free trade accord between Syria and Turkey. The pact would contribute to encouraging investments between them, Anadolu News Agency reported.
Both officials touched upon trade and economic ties between the two countries and means of boosting them as well as building a free trade zone. According to Lutfi, Syria would sign an agreement with Turkey next November to open trade centres that increase trade exchanges between the two neighbouring countries. He noted that bilateral ties are built on the basis of mutual respect and good neighbourhood ties in addition to common concern.

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TELECOMMUNICATIONS

Sistema to acquire Telsim 

Russian AFK Sistema could purchase Turkish cellular operator Telsim, a source in telecommunications circles said, Anatolia News Agency recently. 
"We are not ruling out such a possibility," Irina Potekhina, head of Sistema's PR department, said. Telsim has a licence to supply GSM 9001998 standard cellular services until 2023. The company controls 22 per cent of Turkey's cellular market and has more than seven million subscribers. The Usan family are the shareholders in Telsim and, according to Western media reports, they are experiencing financial difficulties. 
Sistema has set up a subsidiary company in Turkey - Sistema Telekomunikasyon Anonim Sirketi in order to study the Turkish telecommunications market. AFK Sistema is one of Russia's biggest multi-sector holdings. It has a diversified portfolio of investments in companies in the telecommunications, electronics, insurance, financial, real estate, construction, tourism and trade industries. 

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