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FEBRUARY 20-25, 2001 Compiled by the Washington Office of Turkish Industrialists' and Businessmen's Association (TUSIAD-US) CONTENTS TURKISH LIRA DOWN 27 PERCENT; CENTRAL BANK TO MAINTAIN TIGHT MONETARY POLICY Turkish lira on Thursday dropped by 27 percent against dollar in the first trade after the government announced that it was abandoning its exchange-rate controls to stem off a three-day financial crisis. The exchange-rate decision was issued by Turkish authorities in a statement released after a 10-hour meeting between Prime Minister Bulent Ecevit, his top ministers and Central Bank officials. ``Due to the recent economic conditions, the exchange rate will be left to float freely,'' the statement read. State Minister in charge of Economy Recep Onal said the decision was effective Thursday, February 22, 2001. Bankers said the US dollar was being traded at 950,000 lira to $1, up from 688,000 Wednesday, February 21, 2001. But they warned that the figure wasn't an accurate indication of the lira's value, as market participants were waiting for further announcements from the government on how it would revise Turkey's ambitious anti-inflationary program, which is backed by the International Monetary Fund. The devaluation of the lira helped a hobbled stock market, though, after losing 18 percent in its steepest fall ever. Analysts also said Thursday's move would lead to a short-term rise in inflation. The inflation rate stands at about 30 percent, down from 70 percent in 1999. Since Turkey began its anti-inflation program backed by $11 billion in loans from the International Monetary Fund, it had set daily currency rates for the lira against dollar and euro. Overnight lending rates reached an annualized 7,500 percent Wednesday, helping roil markets already fueled by fears of a major political crisis. Opposition parties called for early elections and the 'Civil Initiative', composed of business leaders, urged a Cabinet reshuffle. However, Turkish Prime Minister Bulent Ecevit said no to this demand on Saturday after an emergency meeting with his coalition partners. While pressure mounted for Ecevit, the Prime Minister, flanked with his coalition partners, told a news conference that the decision to float the lira and abandon the fixed exchange rate policy would help to bring fresh impetus to the Turkish economy, help an increase in exports and tourism revenues. Meanwhile, Central Bank pledged to stick to a tight monetary policy deciding to assume a more active role in markets to sustain the new economic balances, as it maintains the tight monetary policy, the bank said in a written statement. It said the IMF would continue to release loan tranches as scheduled, and to finance Turkey's program during the float, which practically means a devaluation of the lira. It added that the Central Bank would present a new central banking law to the government, which is of critical importance in terms of inflation targeting, and make sure that it is quickly enacted. The economic stabilization program has been under pressure since November when foreign investors were scared off by allegations of corruption in the banking sector. A new crisis was sparked Monday, when Ecevit stormed out of a meeting with President Ahmet Necdet Sezer, upset after the president criticized the government for failing to battle corruption. Political stability is seen as essential to the success of the economic program. /Turkish Daily News/ Associated Press-Ankara/ US GOVERNMENT, IMF AND THE WORLD BANK SUPPORT TURKEY'S LIRA FLOAT The US President George W. Bush spoke with Turkish Prime Minister Bulent Ecevit on the telephone Friday and urged him to cooperate with the International Monetary Fund and to continue with economic reforms, Mary Ellen Countryman, a spokeswoman for the National Security Council, said. Bush also assured Ecevit that the United States regards Turkey as a close ally and he cited the strong ties the U.S. and Turkey have. In addition, White House spokesman Ari Fleischer said the Bush administration was united in its desire to give Turkey support. He said that Bush backed Turkey’s move to float the lira. On Thursday, Treasury Secretary Paul O’Neill also supported the Turkey’s move. Turkey is an important ally and good friend of the United States, O’Neill said. The United States continues to back the IMF’s ongoing support for Turkey’s economic reform program. Besides, The International Monetary Fund (IMF) Managing Director, Horst Kohler, said the IMF also supported Turkish government's decision. Speaking after the evaluation meeting in Washington, Kohler said the IMF hoped the inflation rate would keep decreasing and stability would be maintained in the exchange rates. Kohler said, "The IMF supports the Turkish government's decision to allow floating of the lira. We are pleased with the Turkish government's determination to maintain a sustainable development and stable exchange rates. The inflation rate is expected to keep decreasing and the acquirements from the IMF-backed economic stability program will be protected." Following the International Monetary Fund (IMF), the World Bank announced its full support for the Turkish government’s decision, as well. A World Bank statement issued in Washington said the World Bank would work in coordination with the Turkish government, IMF and other related groups for the success of the economic program and reforms carried out in Turkey. /Turkiye /Hurriyet/ NTVMSNBC/ Turkish Daily News/ Associated Press-Ankara/ US AIRCRAFTS BOMB IRAQ; US OFFICIALS SAY THEY CONSULT TURKEY ON IRAQ The US warplanes, which were based at Incirlik Air Base, bombed Iraqi targets in northern Iraq. In a statement issued by the US Command to Europe in Germany, it was stated that after the Iraqi anti-aircrafts sites locked onto the American aircrafts in Musul, the targets were hit. In the statement, it was said the aircrafts returned to the Headquarters without any losses. Prime Minister Bulent Ecevit gave a statement concerning the issue and said, "Within the information and approval of the Turkish officers, an air maneuver was carried out between the two countries in accordance with the rules." In the statement issued by the Ministry of Foreign Affairs, it was said that this incident was not the continuation of the bombing of Baghdad last week. /Aksam/ Accordingly, the spokesman for the U.S. State Department, Richard Boucher, has stated that the American administration has been regularly consulting Turkey, the Gulf States and other allies over Iraq, the Anatolia news agency reported. In a press meeting in Washington, when asked about Turkey's complaint that Washington has not consulted with Ankara on the latest U.S.-British bombing of Iraq, Boucher said: "Our cooperation with Turkey on Iraq has been going on very well. Turkey is a very important partner in this process and it is one of the countries that has concerns on things Iraq could do." Asked why the U.S. administration had not consulted with its allies in the region before bombing Iraq, Boucher said, "When we deem it necessary to consult with the allies, we will not hesitate to do so particularly with a close ally like Turkey." /NTVMSNBC/ ELECTRICITY LAW ENACTED, EU PLEASED The Turkish Grand National Assembly (TGNA) enacted the draft law concerning the opening up of electricity markets to private enterprises, which was undertaken as part of the program implemented with the International Monetary Fund (IMF). With the arrangement made in the 4th Article of the draft law, the period given for the thermic power stations, which are within the context of the transferring the right of management, and for the transfer of the regions of distribution was extended until 30 June. In addition, a period of five years was given for the completion of the construction of refining facilities. With the same change made in the same article, the rule that arranges the State's being the monopoly in communication was abolished. /Aksam/ The Turkey Representative Office of the European Commission issued a written statement and expressed the European Union's pleasure that the Electricity Market Law had been approved by the Parliament, the Anatolia news agency reported. The statement said the law would ensure "just competition, transparency, credible and stabilized demand and supply and lower costs for both producers and consumers." One of the most important components of the EU policy is the liberalization of the energy sector, which is also one of the prerequisites for Turkey to become an EU member. Emphasizing that the new law was only an outline, the statement said that other important provisions such as "unbundling" -- the separation of service providers -- seemed to have been put on the back burner. "The commission hopes to continue dialogue with Turkish authorities in order to ensure that the subsidiary regulations would be in compliance with the EU regulations and the establishment of an independent regulation body to have complete authority on tariff policy," said the statement. /NTVMSNBC/ ATHENS CHANGES THE SO-CALLED GREEK GENOCIDE BILL, NEW TRIALS CONCERNING OCALAN CASE IN GREECE Good news came from Turkey's traditional rival, neighboring Greece, at a time when Turkey has been struggling to overcome a deep economic crisis. Greek Premier Costas Simitis asked ministers to remove the word "genocide" from a presidential decree concerning the allegation of genocide committed by Turkey against Greeks living in Anatolia in the 1920's. Turkey harshly criticized Greece earlier this month when government ministers endorsed the decree declaring Sept. 14 a remembrance day. The Greek Parliament had approved the decree in 1998, when relations between the two neighbors were at a low point, to remember the "genocide of Asia Minor Greeks." Secondly, on Wednesday a court indicted 10 people on felony counts of endangering the country's safety by illegally smuggling terrorist organization PKK leader Abdullah Ocalan into Greece two years ago before his eventual capture by Turkey. Ocalan was also indicted on a misdemeanor count of entering the country illegally, while an elderly Greek writer and her daughter were also charged with misdemeanor counts of sheltering him. Ocalan had been on the run for months when he was spirited into Greece in January 1999 by a group of Greek sympathizers led by retired naval officer Andonis Naxakis in an effort to blackmail the government into granting him political asylum. Fearing a crisis or possible war with longtime rival Turkey, the Greek government had repeatedly said he was unwelcome. Those who allegedly enabled Ocalan to enter the country acted "in full opposition to the government's firm and stated position that Ocalan's entry into the country would be nationally damaging," the indictment said. Meanwhile in an article published in Elefterotipia, Turkey and Greece called to end armaments for the sake economic stability particularly after economic crisis in Turkey. It was also said that only the weapon companies around the world, but mostly in the U.S., have benefited from these armaments. /Cumhuriyet/Turkish Daily News/NTVMSNBC S & P LOWERS TURKEY’S RATING Credit rating agency, Standard & Poor’s, lowered its long-term issuer credit rating on Turkey from a ‘B plus’ to a ‘single B’ and short-term issuer from ‘B’ to a ‘C’. S& P has stated that current financial crisis was causing a significant deterioration in the public finances, and the restructuring and sale of 11 banks under the control of the Savings Insurance Fund would now be more difficult. /NTVMSNBC/ TUSIAD'S PROPOSAL In a press release, Turkish Industrialists’ and Businessmen’s Association (TUSIAD) claimed, “the Government should designate a Deputy Prime Minister in charge of the economy from within/outside the current Cabinet Members or National Assembly. The designated minister should be endowed with the necessary skills, experience, knowledge and credibility. The Government should also stabilize the foreign exchange and Turkish lira markets at reasonable levels.” The statement emphasized, “The most important factor leading to the failure of the Macroeconomic Stabilization Program has been the absence of strong coordination of economic policies in the Government. This has been the case despite the fact that the Program had been vigorously backed by all the segments of the society and had almost achieved its targets.” /Aksam/ LAW CONCERNING THE INTELLECTUAL PROPERTY RIGHTS APPROVED BY TGNA The Turkish Grand National Assembly (TGNA) approved the law that aims to make some changes in the Intellectual Property Rights. Within this framework, people who change an artwork without the permission of its artist will be sentenced to a heavy prison term of maximum six years and fined punishment of 150 billion TL. Radio and television broadcasters will have to take the written permission of the artists before broadcasting their works. /Star/ U.N. PRAISES TURKEY A report published by the United Nations praises Turkey on its fight against illegal narcotics production, trafficking and sales. The report published by U.N.'s International Committee on Narcotics Control Board (INCB) points out that drugs produced in Afghanistan pass via Turkey along the two routes to Europe. The report points out that Turkey uncovered an illicit plant where the amphetamine Captagon was produced, closed it down and adamantly confiscated large amounts of it throughout last year. The report also points out that Turkey relentlessly pushes forward with its campaign to uncover heroin production facilities. It has been reported that many heroin production facilities from Turkey were relocated to Azerbaijan. Turkey’s newly established intelligence unit to investigate money-laundering efforts of drug traffickers has also been reported as having gained Turkey a few “brownie points.” /NTVMSNBC/Aksam/ POWELL SUPPORTS THE TURKISH STANCE German Foreign Minister Joshka Fischer discussed the proposed European defense force with his American counterpart Colin Powell on a trip to the U.S. Colin Powell’s suggestion that European defense plans should include NATO members contradicts with the France and Germany’s views, two major players of the European Union. State Secretary Colin Powell further underlined that the proposed European defense force must not compete with or have a parallel planning alongside NATO. Mr. Powell said that the US would support the European Security and Defense Initiative as long as these criteria are abided. The message conveyed by the American Secretary of State is clearly supportive of Turkey’s stance on the issue. German Foreign Minister Joshka Fischer, meanwhile, could only defend that the concept of a European defense, by no means seeks to weaken NATO and on the contrary, it is designed to strengthen NATO. Observers in Washington are saying that Powell’s words were a warning to France and Germany, the two countries pushing for the European defense force concept. /NTVMSNBC/ |
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