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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: 101 - (27/09/05)

German electoral result helps Turkey to start EU talks
The European Union is the key to Turkish politics right now, and within the EU so is Germany. Brussels looks set to start membership talks with Turkey as scheduled, despite last minute objections by France and some in Germany. The cliff-hanger result of the German elections on September 18th, with one per cent of the vote dividing the two main parties, was a boon here to those wanting talks to proceed and to succeed. It was a massive personal triumph for German chancellor, Gerhard Schröder, who had been expected months beforehand to lose by a landslide.
Ahead of the elections Angela Merkel, leader of the German Christian Democratic Union party (CDU), had circulated a letter to European heads of government in which she said: "We are firmly convinced that accepting Turkey would overburden the EU politically, economically and socially and endanger the process of European integration." She proposed rewriting the negotiating framework to include "privileged partnership" as the talks' alternative goal to membership.
The German chancellor on the other hand favours Turkey's EU membership and remains at the helm until the crisis is resolved, which could take weeks. After being expected to lose to the CDU, the governing SPD remains leader in the caretaker government and in a strong bargaining position. 
The talks duly started on October 3rd as planned. Had she been elected, some might have expected Ms Merkel to put a stopper on them, not by attempting their last minute cancellation, but by obstructionism once they had begun. Diplomats believe that that is now unlikely, if only because it would mean a bruising battle at a time when her hands are full at home; and she will have plenty of future opportunities to push her views on Turkey if she pulls off the unexpected and assumes an influential role in German politics.

The French raise the Cyprus issue
EU ambassadors meeting in Brussels worked out language to defuse a dispute raised mainly by the French that threatened to block the talks, arising from Turkey's refusal to recognise the divided island of Cyprus, an EU member since last year. The agreement still has to be finalised by EU foreign ministers and the talks face a long and rocky future. Still, diplomats now are optimistic that they will at least continue.
"The French did not block it, so it looks much more clear now," said an EU diplomat familiar with the ambassadors' closed-door meeting. The Cypriot ambassador had asked to help draft the text, the diplomat said, which also suggests Cyprus wouldn't block the deal.
Whether to admit Turkey into Europe's mainly Christian club of richer nations has emerged as one of the most divisive divergent views of the bloc's identity, its political future and its strategic role. The negotiations - in reality a process in which Turkey will have to adopt more than 80,000 pages of EU laws - are likely to take at least a decade and face huge obstacles.
Even so, after 40 years, the long process on admitting Turkey started on October 3rd, indicating the EU is at least open to the idea of admitting a large Muslim country. Some EU countries, such as the UK, see that as essential to stabilising Europe's relationship with the Middle East and their own Muslim citizens.
Recently, Turkey fulfilled the final condition for the start of membership talks by signing an agreement that extended its existing customs union with the EU to include the 10 countries - including Cyprus - that joined the bloc last year. But at the same time, Turkey separately declared that extending the customs union doesn't mean Turkey recognises Cyprus as a country. Suddenly, the launch of talks looked to be in doubt again.
French politicians including Prime Minister, Dominique de Villepin and President Jacques Chirac asked how Turkey could expect to start negotiation for EU membership when it refused to recognise an EU member state.
Under the deal worked out, however, the EU said that Turkey could start talks on time because its statement on Cyprus is purely political and has no legal relevance to the process. Nevertheless, the EU declaration calls for the issue to be reviewed next year.
Turkish Foreign Minister, Abdullah Gul, appeared to address a demand made by Mr Chirac that Turkey needed to clarify its position on Cyprus. Mr Gul said in an interview with the Turkish Daily News that his country is ready "to establish relations with the new partnership state that will emerge following a comprehensive settlement on Cyprus." Cyprus has been divided into a Turkish-occupied north and a Greek Cypriot south since a 1974 Turkish invasion in response to a failed coup by supporters of enosis or union with Greece, organised by Greek officers seconded by the then regime of 'The Colonels' in Athens.
The Turkish government and Turkish Cypriots backed a referendum to approve a United Nations brokered settlement for the island in April 2004, but it was voted down by Greek Cypriots, much to the embarrassment of the EU, which had hoped to reunite the island before it joined the political and economic union on May 1st and had received false promises from the Greek Cypriot leaders, that they would not campaign against the UN proposals.

General EU pressure from Brussels on Cyprus
Turkey will face continuing European Union pressure to normalise ties with Cyprus despite the October 3rd start of EU membership talks, the bloc's top enlargement official said recently. 
Full implementation of an EU-Turkey customs union pact to include Cyprus was a matter of "extremely serious concern" for the entire 25-nation bloc, EU Enlargement Commissioner Olli Rehn told reporters. "Clearly this is a red line for the EU - this is not a matter of negotiation, it is a matter of commitment by Turkey," Rehn said ahead of talks with Turkish Foreign Minister Abdullah Gul. Rehn added that Ankara must not speculate on "any wavering" by the EU on issues like granting Cypriot ships full access to Turkish ports.
Backers of Turkey's EU membership bid say Turkey's decision in July to extend its customs union pact with the EU to cover Cyprus clears an important legal obstacle to the start of the entry talks.
But in a move which has irked France, Cyprus, Greece and others, Ankara has also made clear in a unilateral statement that this does not mean diplomatic recognition of the Greek Cypriot government.
EU governments will also issue a separate declaration demanding that Turkey must ensure a quick "de jure" normalisation of ties with Cyprus. The EU counter-declaration will insist that Ankara must implement the customs union deal in a matter which is "effective, complete and non-discriminatory."

Austrian Greens go ballistic
Austrians are as hostile to Turkish EU entry as the Germans and in a related development, veteran Austrian Greens member of the European parliament Johannes Voggenhuber, said recently that "Turkey will never be a member of the EU - never!"
At the Alpbach Forum of political, economic and cultural discussions, he said it was true that Europe had already promised Turkey negotiations 40 years ago, and that this promise was now being kept. "But where are the heads of state and government getting their legitimisation from? Certainly not from the citizens - they were never asked.
"The heads of state and government of the EU are deciding with incredible arrogance over the heads of their citizens," Voggenhuber said. Voggenhuber, who has represented Austria in Brussels and Strasbourg for a decade, said today's EU was only "a pseudo-Europe." It reminded him of 17th Century Germany, with the various princes managing to prevent political unity.
"That's exactly where we are today. Europe is experiencing a time of re-feudalisation," he said. Included in this process were the various power-holding institutions in Brussels. True unification was being held up. In this situation of a "twilight zone," the citizens were as powerless as ever.
The European Commission says in reaction that the prospect of membership talks failing - they could last a decade or more - is already countenanced in a draft negotiating statement saying the talks are "open-minded" and not certain to succeed.
As regards Ankara's reaction, "We are pretty sure the voice of reason will prevail at the end and that we will be able to get through this difficult period," a Turkish official said.

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AVIATION

THY deals with Boeing for next-generation 737s

Turkish Airlines (THY) has ordered from Boeing next-generation 737 800s, as part of an order placed by the carrier in 2004, it was reported recently. The Boeing firm said that this deal was worth 542m Euro at list prices and the airplanes are scheduled for delivery in 2008, Anadolu News Agency reported. 
According to general manager Temel Kotil, THY plans to open new markets in Europe and central Asia and it seems that it is progressing with its growth strategy. Kotil believes Boeing's next-generation 737s operational flexibility will play an integral part in THY's growth strategy. The Turkish group operates a mix of 43 Boeing classics and next-generation 737s. Meanwhile, Aldo Basile, Boeing sales director for Turkey, said the Turkish economy is expected to grow at a faster rate than elsewhere in Europe over the next several years.

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CREDIT RATINGS

Fitch affirms TSKB ratings, outlook is stable 

Fitch Ratings, the international rating agency, announced on August 29th that it rated Turkiye Sinai Kalkinma Bankasi's AS (TSKB) long-term foreign and local currency at BB- (BB minus), short-term foreign and local currency at B and the long-term national rating at A-(tur) (A minus(tur)), New Europe reported. 
The outlook on all long-term ratings is stable. TSKB is the largest privately-owned development and investment bank in Turkey that is owned by some of the country's leading commercial banks. It mainly extends medium- and long-term loans matched funded by facilities obtained from diversified international and domestic sources. The Turkish Treasury guarantees the majority of its overseas funding.

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FOREIGN ECONOMIC COOPERATION

Turkey to intensify trade with Georgia 

Speaking at the Turkish-Georgina economic cooperation forum in Tbilisi on September 13th, Turkish State Minister, Kursad Tuzmen, said Turkey wants to increase its bilateral trade with Georgia - up to US$2 billion in the next three years, Anadolu News Agency reported. 
He noted that Turkey and Georgia should focus on cooperation which will enable services, capital and goods to move freely, adding that Turkey wants the Black Sea region to be a free trade zone. 

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FOREIGN RELATIONS

Better relations help turkey boost exports to neighbours

Turkey recently doubled or quadrupled its exports to Greece, Syria, Iraq, Iran and Bulgaria, the media reported. Turkey used to have problems with these countries but with the adoption of the strategy of developing trade with neighbouring states, the country is now achieving success.
This is due to the strategies that were implemented in recent years, Turkish State Minister, Kursad Tuzmen, said, Anatolia News Agency has reported.
Tuzmen, emphasising trade with neighbours, said Turkey has improved its export figures adding that exports of 18bn Euro are a considerable amount. Tuzmen, reminding the export policy towards neighbour countries is in the government's programme, said: "As soon as we came to power, we started to implement our projects one by one.
We went to each of these countries; we took part in meetings and now we are starting to reap the fruits of these efforts. This is the result, figures coming make us smile despite input costs in our troubled export times."
Volume of trade with countries with which Turkey has had serious problems in the past has increased by record levels. Exports to Syria increased 49% and to Iraq 58% in the last 6 months. Exports to neighbouring countries have reached 30% of total exports. Economists underlined that good relations with the neighbouring states can play an important role in the increase of 17% in the export in the first 6 months of the year.
Tuzmen evaluated this development saying, "The increase of the exports to neighbouring states has been 28% even in July when the increase in exports is 1.1%."
Turkey has revised its relationships with countries with which it has geographical, cultural and historical ties besides having common borders.
These countries include Bulgaria, Georgia, Azerbaijan, Syria, Iran, Iraq, Turkish Republic of Northern Cyprus as well as Central Asia, Middle Eastern and Balkan countries, including Russia, Romania, Ukraine and Egypt.
Turkey's exports to this market whose total demand of imports is 300bn Euro was 5.5bn Euro in 2000 and reached 7.2bn Euro in next 2 years.
Tuzmen also spoke about the beneficiaries of the strategy applied to neighbouring countries in the region.

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FOREIGN TRADE

Kazakstan, Turkey ink trade protocol

The head of the foreign trade agency under the Turkish government, Tundjer Cayalar, and the Kazak Deputy Minister of Industry and Trade, special representative of Kazakstan in the negotiations for WTO entrance, Zhanar Aitzhanova, signed a protocol in Ankara recently on the completion of the bilateral negotiations for access to the Kazak market of commodities and services on mutually acceptable terms for both sides, Anadolu News Agency reported. 
Turkey is the member of the working group for Kazakstan's entry into the WTO. The issues revolving around the bilateral talks concerning the terms of entering the Kazak market of imported goods and foreign service suppliers in compliance with the request of the Turkish party have been taking place since July 2003.

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TELECOMMUNICATIONS

Turkey seeks bids for Uzan company 

Turkish GSM operator Telsim, the country's second largest mobile telephone network, will be sold by Turkey's Savings Deposit Insurance Fund (TMSF) in a tender on December 13th. An auction among the short listed bidders, with a starting price of 2.804 billion Euro, will be started in the near future, the fund told Anadolu News Agency recently.
Telsim was seized from the scandal-ridden Uzan family after the collapse of its two banks, Imarbank and Adabank, in an effort to recoup the group's debts totalling eight billion Euro. Its sale had been delayed because of legal troubles over debts to Motorola Inc and Nokia Corp, which have jointly sued the Uzan family, accusing it of borrowing 2.7 billion Euro to build a next-generation wireless system with no intention of repaying the money. According to a statement from the government agency handling the sale, potential buyers had until September 19 to register an interest in the sale, and final offers are due by December 5. The TMSF said that the fund will sell Telsim and as a "total economic and commercial entity," with all its assets and agreements essential to the successful continuation of the business, including the 25-year GSM licence with Turk Telekom. Telsim's debts from previous periods would be paid out of the sale revenue generated. If TMSF decides to continue the tender process, public bargaining would take place on December 15. 
Vodafone Group Plc, the world's biggest mobile phone operator, is interested in Telsim, which ran up debts of more than three billion Euro to Schaumburg-based Motorola and Finland's Nokia under Uzan management. "We don't know yet if Telsim's debts are included in the watchdog's valuation or not," said Basak Engin, an analyst at Oyak Securities in Istanbul. "If the debts to Motorola, Nokia and the government aren't included, then the valuation looks okay, even though it might be at a bit of a discount." The government is trying to convince Motorola to drop lawsuits seeking compensation from Turkey, which may be an obstacle to the sale. 
The Uzans failed to repay money borrowed from Motorola and Nokia to build Telsim's cellular network, according to court rulings in the US and Switzerland. On August 25 Motorola said it has been "frustrated" in its collection efforts by the Turkish government's takeover of Telsim. Motorola recently stated that US and UK courts granted its requests to freeze revenue owed to Telsim by phone service providers in the US, Britain, Belgium, Israel, the Netherlands and Switzerland. The phonemaker also won a 2.5 billion Euro award against the Turkish company from an arbitration panel of the Zurich Chamber of Commerce on June 13.

1st instalment for Turk Telekom 

The Lebanese Hariri family's Oger Telecom-led consortium won Turk Telekom's privatisation tender with a 6.55 billion Euro bid after tough day-long negotiation at the end of June, reported Anadolu News Agency. On August 19th, an agreement for the sale of 55 per cent stake in Turk Telekom was sent to purchaser Oger Telecom which also includes the Saudi Oger Company and Telecom Italia. The legal proceedings for the transfer of Turk Telekom from state to private hands was handled by Saudi Oger and Telecom Italia. 

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TOURISM

Morgan Stanley: Turkey's tourism sector on the rise 

Morgan Stanley, a leading investment bank released a report on August 19 which read that "Turkey's tourism sector, just like Michael Schumacher on Formula 1 circuits, breaks new records." According to the report, the inaugural Formula 1 grand prix in Istanbul has become a new tourist attraction and this will certainly boost the tourism sector. The report said that the number of tourists reached 11.7 million in the first seven months, but even this figure does not fully reflect the country's race towards becoming a global leader in the sector, New Europe reported. 
Morgan Stanley expects the tourists arrivals to reach at least 22 million this year. As a result, Turkey's tourism revenues increased by 205.4 per cent on a cumulative basis from US$5.2 billion in 1999 to US$15.9 billion last year, and according to Morgan Stanley's projections, will exceed US$18 billion in 2005 and US$20 billion next year.
According to the figures of the State Institute of Statistics (SIS), the number of foreign tourists visiting Turkey in July is up by 22.5 per cent, over the same period of last year, reported Anatolia news agency. Three million foreign tourists arrived in Turkey in July. 20.1 per cent of all foreign tourists visiting Turkey are German, followed by Russian, Briton, Bulgarian, French, Belgian, Iranian and Greek tourists. 
"However, we should not overlook the role of qualitative changes in this notable improvement. European visitors continue to account for more than half of tourist arrivals, but the visitors from oil-exporting countries are becoming more and more important. For example, the number of Russian tourists visiting Turkey increased by 265.8 per cent between 1999 and last year," the Morgan Stanley report indicated. 
The report also pointed out that the tourism industry is playing a vital role in boosting the country's economy. The report said, "taking into account the multiplier effects, the tourism sector has become one of the key industries of the economy in terms of employment growth and hard-currency earnings that provide a substantial cushion against Turkey's widening merchandise trade deficit. Although we believe that the current account deficit is a manifestation of structural shifts in the economy, it also reflects the country's bottlenecks in generating export revenues." 
The report cited the example of the healthcare sector with less doctors and the increasing cost of medical services in Europe, Turkey's expanding hospital network is becoming an outsource centre. Similarly, the report stressed that geographical factors provide an excellent base for logistical operations (and aircraft services) that could create value-added jobs and boost hard-currency earnings.

Egypt, Turkey target better tourism cooperation 

Tourism cooperation between Egypt and Turkey will develop in the near future, New Europe reported recently.
The office of the Turkish cultural and tourism attache in Cairo said the neighbouring relations between Egypt and Turkey played a vital role in increasing cooperation, pointing out that the number of Turkish tourists who visited Egypt this year increased to 1,000 up 30 per cent compared with last year.
The number of Egyptian tourists who visited Turkey last year amounted to 35,000 with an increase of 12 per cent compared with a year earlier, the office said.

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