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TURKEY


 

 

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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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Update No: 119 - (30/04/07)

Turkish Foreign Minister Abdullah Gül is set to become the country's next president.

For months, tensions have been building within Turkey amid speculation that Prime Minister Recep Tayyip Erdogan would run for president despite doubts from within the army as to his commitment to the country's secular system of government. On April 24th, Erdogan announced that he would forgo the presidency -- but the candidate chosen instead could be just as controversial. 

Erdogan is easily the most popular politician in Turkey. Had he stood, his election would have been a shoe-in. But he would have given up the substance for the shadow. The premiership is far more important than the presidency in Turkey.

He announced that his Justice and Development Party (AK) has chosen current Foreign Minister Abdullah Gül to succeed the current president, Ahmet Necdet Sezer, whose seven-year term ends on May 16th. Given the government's parliamentary majority, Gül's eventual appointment by the 550-member body is seen as little more than a formality.

"After our evaluations to seek a name for the 11th president, we have come up with the name of our dear friend Abdullah Gül," Erdogan said. "No doubt, the final decision rests with the parliament. The decision of the parliament will be the decision of the people."

Many in Turkey had opposed an Erdogan presidency due to the prime minister's alleged Islamic leanings. Some 300,000 took to the streets earlier this month to oppose Erdogan, and the Turkish army, which traditionally sees itself as the protector of the secularism introduced by Mustafa Kemal Atatürk soon after the 1923 founding of modern Turkey, even issued a subtle warning against an Erdogan presidency.

But even as the decision shows the AK Party's willingness to avoid a confrontation over an Erdogan candidacy, Gül embodies many of the same doubts. Like Erdogan's wife, Gül's wife Hayrunisa wears a headscarf and secularists are opposed to the idea of Islamic attire in the presidential palace. Head scarves have been banned in public offices and on university campuses since Atatürk's Western-style reforms in the 1930s.

"His mind-set is no different than Erdogan's," Mustafa Ozyurek, deputy chair of the main opposition party, Republican People's Party, told the AP. "There is no evidence that he is sincerely loyal at heart to the secular republic and principles of Atatürk."

Gül briefly served as prime minister from 2002 to 2003 before moving into his current role. As foreign minister, he has helped guide his country through reforms necessary for eventual European Union membership as well as improving relations with neighbouring Syria. He is also seen as a moderate despite his loyalty to Erdogan, having renounced political Islam and pointing out that the movement's leader, former Prime Minister Necmettin Erbakan, made mistakes. 
"The president must be loyal to secular principles," Gül told reporters recently. "If I am elected, I will act accordingly."

Secularists in Turkey considered Erdogan unfit for the presidency due to his lifelong connection with political Islam. His Welfare Party was banned in 1997, having been found a threat to the secular state, as was the ensuing Virtue Party in 1999. Erdogan was convicted of inciting religious hatred in 1998 for publicly reciting a poem which read: "The mosques are our barracks, the domes our helmets, the minarets our bayonets and the faithful our soldiers...." He served four months of a 10 month sentence for the infraction.
The position of the Turkish president is largely a ceremonial one but also includes the power to veto legislation. Outgoing President Sezer rejected a record number of bills and appointments during his term for fear of encroachments on Turkish secularism.

The Armenian sore; Turks stage demo in US ahead of April 24 
Most Turks are in a state of denial about the Armenian genocide of 1915. It was Hitler who famously said in the 1930s: "Who know mentions the Armenian genocide?" The Armenians in the Dispora did of course, but nobody else. Hitler had another genocide in mind that lay in the future. Thanks to it, everyone is now much more sensitive about genocide. 

The Federation of Turkish-American Associations (TADF) and the Young Turks Association held a joint rally titled "An End to Armenian Lies," in a show of protest against Armenian allegations of genocide days before April 24th, when Armenians mark the anniversary of what they claim was the beginning of a systematic genocide campaign at the hands of the late Ottoman Empire. 

Addressing more than 500 participants ahead of the four-hour long rally on April 21st, TADF President Atilla Pak called on the US administration to be fair, while also saying that their primary goal was to give accurate information about the alleged genocide. 

"Bringing up allegations of genocide spells hiding the truth. Today unfortunately truths are being denied and facts are being distorted. Turks have never committed genocide along their thousands year long history," Turkey's Permanent Representative to the UN Ambassador Baki Ilkin, who also attended the rally, told reporters for his part. Meanwhile, US House Speaker Nancy Pelosi once more declined to meet with a group of Turkish parliamentarians who were lobbying in Washington a resolution based on Armenian allegations of genocide, as she did with two other Turkish parliamentarian group in the recent past. 

The resolution was presented to the US House of Representatives earlier this year, though the timing of the vote has yet to be decided. Turkey has warned that passage of the resolution would harm strategic relations with the United States and undermine cooperation in key regions across the world, in Afghanistan, Iraq and elsewhere. During a February visit, Pelosi refused to meet Foreign Minister Abdullah Gül as well.

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There is no doubt that a major crisis is developing in the Mediterranean over Cyprus. At the bottom of it is the discovery of oil offshore. The finding of black gold causes trouble as unfailingly as of the yellow variety. 

The real opponent for Greece - Turkey
There is no question that there are three powers that really matter for Greece, The EU, the US and Turkey. Russia is dear to the Greeks, fellow Orthodox in religion as they are, just as Greece is to Russians.

But Turkey is far more important in every sense. Even Russian energy supplies come via its main rival.

Turkey is both a danger to Greece in the Aegean and a major threat to Greeks in Cyprus, who are regarded as virtual compatriots. No Greek has forgotten the goal of Colonel Grivas half a century ago, enosis, Cypriot union with Greece. All expect it to happen one day. The colonels bungled it in 1974. They are just biding their time.

Greek-Turkish Military Altercations Expected as Cyprus Readies for Offshore Oil Exploration 
A major military face-off between these perennial rivals is looming, motivated by Turkish alarm over the imminent plan of the Cypriot government to explore for oil in the Mediterranean Sea. The showdown will reach a peak sometime between May 20-July 20, according to Greek media reports, now confirmed by high-level sources in Athens and in Western Europe.

This is obviously a major flashpoint in world politics. It is extremely fortunate that it comes after years of improved relations between the two countries, greatly helped by their common membership of NATO. Those who doubt the usefulness of that organisation should reflect accordingly. 

Violence, however unlikely, could, nevertheless, come about through yet another provocative encounter between military aircraft over the eastern Aegean, as was witnessed with last summer's F-16 collision that left one Greek pilot dead. Greece and Turkey have long been at odds over boundaries in the island-studded Aegean Sea, and regularly send armed fighters to intercept each others' military flights.

The Greek fighter planes encountered Turkish planes near the island of Karpathos, well within Greek territory. The majority of simulated dogfights, which take place on a regular basis and have one positive result (of giving the pilots some real-life training), however take place closer to Turkey and the Aegean coast where several islets disputed by Turkey lie. The closest Greece and Turkey came to war was a decade ago, over such an islet near Kalymnos.
The summer 2006 altercation occurred, Greek media widely speculated, because of intense Turkish interest in state-of-the-art Russian-made mobile anti-aircraft units in place in the Lassithi prefecture of eastern Crete. This suspicion was quickly confirmed by military sources in Athens. The question now is whether Turkey's level of interest would exceed that of last year, in relation to the emerging situation in Cyprus.

Turkish initiative to disarm fighters
There are positive indications here that Turkey does not want to escalate the situation. Turkish Chief of General Staff Gen. Yasar Buyukanit has proposed that Greek and Turkish fighter jets should stop armed flights over the Aegean Sea, to defuse military tension that led to the fatal collision last year. Buyukanit said Turkey was prepared to disarm its jets flying over the Aegean. "I cannot understand why our aircraft have to be armed," he said. "We are not enemies."

"We want a solution without weapons," Buyukanit said. "We are ready to disarm our jets. (Greece) can do it (too)."

Referring to the May collision, Buyukanit said it was "very dangerous for our pilots to fly so close, as close to 300 metres from each other."

The two neighbours' military leaders started a more direct dialogue after the accident, and Buyukanit visited Athens in November, returning a visit from his Greek counterpart, Adm. Panagiotis Chinofotis. Greece and Turkey also set up telephone hot lines between their air commands and chiefs of staff.

The Cypriot jewel; Turkish alarm
Cyprus is a most splendid place. It is hardly surprising that so many have coveted it down the centuries. This was for its magnificent scenery, climate and coastline. Now it turns out to have oil as well.

Nicosia's bold initiative to explore for oil, with the assistance of multinational oil companies, has brought the Turkish military to near-panic mode. A successful find and subsequent investment would dramatically increase the Greek Cypriot government's foreign support and thus bargaining position with Turkey over the divided island.

Cyprus' geopolitical value, even preliminary to hydrocarbons, lies in its strategic location, between three continents, near Israel and a stop en route to Suez. During the Israeli-Lebanese conflict last summer, thousands of foreign tourists, including many Americans, were evacuated quickly to Cyprus- a fact gratefully acknowledged by the US government when it sent a naval vessel to Cyprus on a goodwill visit meant to recognize the Cypriot contribution to securing the safety of Americans during the fighting.

Until now, the international community has tended to view Cyprus only in terms of its perennial security problem, resulting from the 1974 Turkish invasion and occupation, in an operation called Attila (1 &2). However, 2007 looks likely to be the year in which Cyprus takes the first steps towards becoming an energy hub- if the government's plan to proceed in exploiting the rumoured hydrocarbon reservoirs deep beneath the Eastern Mediterranean Basin are allowed to go on unimpeded by military provocations further north.

In December 2006, the first media reports came out of Nicosia revealing the intention of the Cypriot government to search for oil assumed to be found offshore, southwest of the island. Moreover, Cyprus then signed agreements with Lebanon and Egypt so as to draw lines in relation with the zones allocated to each state.

In late January 2007, the Turkish leader of the self-proclaimed Republic of North Cyprus, Mehmet Ali Talat, stated that an unpredictable situation might occur should Cyprus go along with its initial plan. Basically, the Turkish leader formulated a threatening scenario backed by the government of Turkey, considering that it was soon followed by a warning from Ankara to Beirut and Cairo not to proceed along with Cyprus in exploiting oil deposits in the region.

When the Cypriot announcement was made, Turkey seemed to be caught off-guard diplomatically; it had assumed Cyprus would not be able to initiate such a dramatic decision that could alter the political realities in the Eastern Mediterranean should oil is found. Greece has not voiced full support for Cyprus yet, deciding not to inflame the already delicate Greek-Turkish relations.

Army on full alert
However, behind the scenes the Greeks are taking great care to ensure that the situation does not escalate, and if it does, that the military is prepared. According to information received by Balkanalysis.com from high-level military sources in Athens, the Greek army went on an emergency footing on April 7, in anticipation of a new Turkish provocation in the eastern Aegean. This source also cited the period of greatest danger as being roughly between May 20-July 20.

Among the likely spill over effects of this will be to dramatically alter the discussions that will take place on the sidelines at NATO's upcoming round-table discussion, set for late June in Ohrid. While most of the private discussion between officials (delegations are expected from dozens of countries) is expected to centre around NATO enlargement, energy security and the Kosovo issue, a breakout of hostilities between Greece and Turkey would put these issues on the back burner, at least temporarily.

A more independent Cyprus?
For the first time in its history, perhaps, Cyprus is with the oil issue formatting a policy that will empower its diplomatic arsenal without having to rely on Athens. Of course, this does not mean any breakdown in the traditional alliance and common national bonds between these two states populated by the same nation. What is essential, though, is that the entrance of Cyprus into the EU, and the overall economic dynamism of the island have enabled it to become more resilient in promoting its national interests. 

A first consequence of this new confidence would be the ability of Greece to concentrate its efforts around Greek-Turkish relations in a more advantageous level than before. Simply put, if Cyprus is strong enough to look after itself on its own, Greece will have more resources to spare on other fronts relating to Turkish territorial claims that have led the two countries towards conflict, as was seen in 1955, 1964, 1974, 1987 and 1996.

Fall-out for the Turks
The crisis has many implications, not the least of which is the vital importance of keeping alive Turkey's hopes of joining the European Union (EU). That is what gives the West leverage to negotiate a peaceful outcome, which the Turks appear to want.

Following the oil announcement, the Turkish Navy reportedly patrolled the area in question, even though no concrete data on its activities could be found. During the past few months, quite a few Turkish analysts, journalists and public officials have proclaimed a looming crisis in case Cyprus becomes an oil-producing country, thus creating the perfect framework by which the EU could accuse Ankara of not conforming to European norms. This would, of course, hinder Turkey's ability to seek an eventual entrance in the union.

The world takes interest
On the purely business level, the possibility of oil underneath Mediterranean Sea in a period of global concern on energy security; has attracted the attention of most of the world's oil multinationals. Large oil companies from the USA, Russia, UK and China, Norway, France and Germany seem to be interested in investing in the assumed hydrocarbon reserves offshore Cyprus.

Despite Turkish opposition, Cyprus has already begun the process of initiating a bidding procedure for the aforementioned oil fields. 11 areas off of southern Cyprus will be the first where the tests for oil will begin. The total surface area is around 70,000 sq. km, and there are also good indications of discovering natural gas as well. French consultants employed by the Cypriot government have already stated that at depths in excess of 3,000 meters there is also a high probability of discovering gas fields as well.

Cyprus has already stated that it will issue three types of permit in relation to the oil fields. The first will be for tests covering a one-year time-frame, the second for three years and lastly a 25-year development license according to which the companies will be able to produce and process oil and gas. As part of its marketing endeavours, from now until mid-July (when the first permits are set to be issued), the Cypriot government plans to organize trips across the major oil capitals of the world in order to market the new riches of the island to prospective investors.

The Americans, who traditionally have placed more weight on the special relationship with Ankara than with Nicosia, have expressed a neutral position and the US Ambassador to Cyprus, Ronald Schilcher, has stated in Cypriot media that it is a sovereign right of the Cypriot Republic to conduct any kind or research on its territory.
Currently, American interests dictate a wide interest in every new oil field that could produce adequate amounts of oil, so as to secure the West from either Russian or Arab control. Therefore, if Cyprus is a country abundant with that resource, the US would be more than happy to support its initiatives and of course to gain a percentage through their own oil conglomerates. Cyprus could thus be considered to be travelling a course towards a NATO entrance, since the alliance has apparently been reincarnated as an armed safeguard of Western 'energy security' vis-a-vis Russia.

Athens measured reserve; a new understanding with Ankara in place 
What is most interesting is the absence of any Greek interference during the past few months, even at the level of mere rhetoric, against Turkey's aggressive threats to Cyprus. Even though there are still quite a few incidents between Greece and Turkey due to continuous airspace violations by Turkish fighter planes, and a sense of stressful relations between the two states; Greece did not take advantage of this situation to bash Ankara in Brussels, or to protest before the international community about Turkey's hardline attitude against Cyprus (a nation with 1/100 of its population). 

Most probably, the Greek government wants to let international interests make their intentions known - a process that will unfold over the coming months and until July - before it makes a statement. That is, unless the anticipated showdown in the Aegean occurs, and forces Athens' hand in advance.

Western consulting firms to the oil and gas industries have had their hands full with the Cyprus dossier for the past several months. According to one consultant closely related with the American intelligence establishment, "some of the companies interested are leery about the risk of potential violence, which we have been aware of and relayed to them." And so, the source states, oil interests find themselves trying to decide whether the anticipated riches outweigh the reward.

The name of the end-game
Relevant to this is another side-effect of possible Turkish aggression, about which the Greek intelligence services are not entirely unaware. That is the spectre, on the other side of the Turkish frontier, of an increase in activity from the Kurdish PKK and intensified activity on the Turkish-Iraqi border. 

Whether such activity could be orchestrated by Greece as a defensive mechanism, or materialize simply as a Kurdish tactic for taking advantage of a moment when Turkey's military is looking westward rather than eastward, is unclear (Greece did, of course, support former PKK leader Abdullah Ocalan surreptitiously in the 1990's). 

In either case, however, it is likely that in the case of violence in the Aegean within the May 20-July 20 time-frame, Kurdish insurgents will try to take advantage of the situation and fighting in eastern Turkey is expected to increase.

                               ******
The world should take note of this hornet-nest of problems. 

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CONSTRUCTION

Arcelik construction profit up 25% for 2006


Turkish Arcelik construction's 2006 net profit rose 25 percent and it has opened its first Beko store in Bosnia and Herzegovina, seeking to expand internationally, New Europe reported recently.
Turkish leading white goods maker, Arcelik, said its net consolidated profit increased by 25 per cent to 324 million Turkish Lira (US$230.7 million) in 2006, boosted by a 48 per cent rise in exports.
The company's consolidated turnover rose by 12 per cent to seven billion Lira (US$4.9 billion), with exports accounting for 3.3 billion Lira (US$2.35 billion), Arcelik said in a statement. Sales of white goods abroad advanced 24 per cent by volume in 2006.
The store, launched in partnership with local importer Omega, is located in the capital Sarajevo. The company plans to increase the number of stores in the country to 50 in the next four years.
Arcelik has been selling its products in Bosnia and Herzegovina since 2002. It sold 110,000 items last year and targets to boost their number by 18 per cent this year. Arcelik targets to raise the share of sales abroad of its total turnover to 50 percent in 2007, general director Aka Gunduz Ozdemir said.
Arcelik has 10 production sites in three countries and employs over 15,000 people. The company has 13 subsidiaries outside Turkey and sells its products to more than 100 countries, as its goods are used by 15 million households in Turkey and by 75 million worldwide.

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FOREIGN COOPERATION

Iran and Turkey want to expand economic ties 

Iran's Finance and Economic Affairs Minister, Davud Danesh-Ja'fari, arrived in Turkey to attend the second meeting of finance ministers for the Economic Cooperation Organization (ECO) held on April 6th, TurkishPress.com reported.
Jafari met his Turkish counterpart, Kemal Unakitan, to discuss expansion of mutual relations. The meeting was also attended by Iranian Ambassador to Turkey Gholam-Reza Baqeri Moqaddam, Danesh Jaafari's entourage as well as Iranian and Turkish reporters. The second ECO finance ministers meeting opened in the Turkish city of Antalia on with the inaugural speech of Unakitan.
The Turkish finance minister said, "Given that Iran and Turkey are two powerful regional countries enjoying great potentials, Turkey is willing to expand its relations with Iran in all fields." For his part, Jaafari thanked Turkey's hospitality during the ECO ministerial meeting and said that Iran is also interested in bolstering mutual ties. "Given the significance of privatisation, foreign investment has been facilitated in Iran. Turkish companies can make optimum use of such an opportunity," he added.

Turkey, Kazakstan pledge to boost cooperation 

Kazak Minister of Foreign Affairs, Marat Tazhin, recently visited Turkey to strengthen cooperation with Turkey in various fields. Tazhin met with Turkish president, Ahmet Necdet Sezer, and Prime Minister, Recep Erdogan. During the meetings, both sides pledged to further boost their bilateral trade ties and tap economic, energy, investment and cultural cooperation, TurkishPress.com reported.
Turkish Foreign Minister Abdullah Gul hailed Turkey's ties with the central Asian country, saying, "We attach great importance to our relations with Kazakstan." On economic and commercial ties, Gul said, "Our trade volume exceeded US$1.5 billion recently. Turkish businessmen and contractors have undertaken a series of important projects in Kazakstan. On the other hand, Kazak businessmen has begun investing in Turkey in the sectors of banking and tourism." 
He stressed that they were planning to complete the Baku- Tbilisi-Erzurum natural gas pipeline this year. The pipeline links Azerbaijan's Shah Deniz gas fields with eastern Turkey, allowing for further exports to Europe. "We also cooperate with Kazakstan in the fight against terrorism. We will continue supporting Kazakstan in international platforms. We support Kazakstan's candidacy to the rotating presidency of Organisation of the Security and Cooperation in Europe (OSCE)," Gul added. For his part, Tazhin said Kazakstan considers Turkey as one of its most important partners in the Middle East and Asia.

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FOREIGN INVESTMENT

South Korea's KT&G to set up 50bn plant

KT&G Corp., Korea's largest tobacco and ginseng company, plans to invest 50 billion Euro in the construction of a cigarette plant in southwestern Turkey in April, a company spokesman said on March 18th, New Europe reported.
The new plant is designed to boost the tobacco giant's overseas sales, the spokesman said. He said ground will be broken for KT&G's first overseas plant in an industrial complex about 80 kilometres southeast of Izmir, the Seoul-based company said. KT&G said the plant would have an annual production capacity of two billion cigarettes a year. 
KT&G said Turkey, the world's seventh-largest tobacco consumer, would help it secure a bridgehead for the European market once it successfully becomes a member of the EU, where many countries, such as Greece, France, and Germany also have high smoking rates. Greece ranks amongst the highest in the EU in many smoking categories. 
The spokesman said KT&G CEO Kwak Young-kyoon would go to Turkey to check on the construction and sales plan. It also cited Turkey's proximity to the Middle East, a key export market.
The company said it also plans to seek other various investment opportunities in the Commonwealth of Independent States (CIS) region and the Middle East, although it did not provide details. The firm's annual exports have grown at an average rate of 42.4 per cent since 1999, with 2006 overseas sales valued at US$350 million.

Poland aims to improve investment dialogue with Turkey

The Polish Embassy staff recently took part in the Turex-Orgef Fair in the resort town of Marmaris, inviting Turkish entrepreneurs to invest in Poland, The New Anatolian reported. 
While addressing the press, Chairman of the Polish Embassy Department of Trade and Investment Zbigniew Kosek said that they would inform Turkish businessmen on investment opportunities in Poland and that they decided to attend all international fairs in Turkey in 2007 with the aim of improving their dialogue with Turkish businessmen. "Besides 10 big companies, hundreds of small Turkish firms are active in Poland. We want to draw attention of more Turkish businessmen. We will encourage them to invest in Poland in textile and tourism businesses," Kosek was quoted as saying. 

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TELECOMMUNICATIONS

Oger and Turkcell set pace in BTC race

Oger Telecom, one of the new breed of acquisitive Middle East telecommunications groups, and Turkcell, Turkey's largest mobile operator, are running neck and neck in the auction for control of Bulgaria's leading fixed-line phone company, the Financial Times reported on April 12th.
Oger and Turkcell have made higher offers for Bulgaria Telecommunications Company than two private equity firms, said people familiar with the matter.
These people said the four offers gave BTC an enterprise value of between 1.65bn Euro and 1.95bn Euro.
Thor Bjorgolfsson, Iceland's first billionaire, triggered the auction by appointing Lehman Brothers to advise on what to do with his option to buy 65 per cent of BTC.
He could decide to retain the option but the most likely outcome is that he will exercise it and sell, said people close to the situation.
Mr Bjorgolfsson was part of a consortium led by Advent International, a US private equity firm, that bought a 65 per cent stake in BTC at its privatisation in 2004.
The consortium paid 230m Euro for the stake and Advent drew on Mr Bjorgolfsson's knowledge of privatisation in Bulgaria.
In 1999, he bought Balkanpharma, Bulgaria's leading pharmaceuticals company, which went on to become part of Actavis, the generic drugs of which he is chairman. Last year Novator, Mr Bjorgolfsson's investment vehicle, paid 650m Euro for an option giving it the right to buy the 65 per cent stake in BTC held by Advent.
As well as launching broadband and mobile services under a modernisation programme, Mr Bjorgolfsson was involved in the reduction of BYC's workforce from 23,000 to 15,000.
Mid Europa Partners is one of the private equity firms that has made an offer for BTC. The other is a consortium of Texas Pacific Group and Warburg Pincus.
Some people familiar with the auction said Oger Telecom and Turkcell may have an advantage over the private equity firms partly because they can achieve synergies between their mobile operations in Turkey and those of BTC.
An estimated 10 per cent of the Bulgarian population is Turkish.
Oger Telecom bought a controlling stake in Turk Telekom, Turkey's dominant fixed-line phone company, in 2005, which in turn owns Avea, the country's third-largest mobile operator.
Oger's controlling share-holder is Saudi Oger, the conglomerate founded Lebanese prime minister killed last year.
Turkcell is owned by Cukurova, a Turkish conglomerate, TeliaSonera, the Nordic telecoms group, and Altimo, the telecoms investment arm of Russia's Alfa group.

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