Compiled by the Washington Office of

Turkish Industrialists' and Businessmen's Association (TUSIAD-US)

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CONTENTS

THREE WOUNDED IN SHOOTINGS IN NORTHERN IRAQ; ERDOGAN WARNS AGAINST FEDERAL STRUCTURE BASED ON ETHNIC DIVISIONS

TALAT-EROGLU COALITION EFFORTS COLLAPSE, TURKEY IN FAVOR OF DENKTAS AS CHIEF NEGOTIATOR IN CYPRUS TALKS

BUSH URGES GREECE TO PUSH FOR CYPRUS SETTLEMENT

ISRAEL APPROVES DEAL TO BUY WATER FROM TURKEY IN RETURN FOR ARMS

VERHEUGEN REBUKES GERMAN OPPOSITION TO TURKEY’S EU ACCESSION; SAYS EU MEMBER STATES WILLING TO ACCEPT TURKEY IN POST 9/11

TURKEY BEATS IMF-BACKED INFLATION TARGET FOR 2003

SYRIAN PRESIDENT AL-ASAD DUE IN TURKEY

TUSIAD HIGHLIGHTS         

THREE WOUNDED IN SHOOTINGS IN NORTHERN IRAQ; ERDOGAN WARNS AGAINST FEDERAL STRUCTURE BASED ON ETHNIC DIVISIONS

Two Iraqi Arabs and a Turkmen were injured Saturday in separate shooting incidents in the volatile northern oil center of Kirkuk. According to a police officer Shirzad Rifaat Kader, the attack was linked to the ethnic tensions that have rocked the city since Wednesday resulting in the death of seven people and challenging a fragile truce between Kirkuk's Kurdish, Arab, and Turkmen population..Two Kurds were stabbed to death in Kirkuk Thursday night and an Arab killed in clashes with police south of the city, a day after four Turkmens and Arabs were killed when a demonstration they staged to protest Kurdish plans to incorporate the city in a future autonomous region turned violent. In another incident, a guard posted in front of a Turkmen political party building was wounded by gunfire, according to Colonel Khattab Adballah Aref of the city's police force.

Prime Minister Recep Tayyip Erdogan said on Friday that federal structures based on ethnic elements would not yield any positive results in Iraq. Erdogan warned it might in cause serious problems in the multiethnic country.  Prime Mnister’s remarks came after the New York Times reported Monday that Iraq's interim leadership and the United States had agreed on a semi-autonomous region for the Kurds in northern Iraq. Adam Ereli, the State Department's deputy spokesman, responded to the report, saying that the issue "is not a decision for the Bush administration." "It's up to the Iraqi people to determine their political future," Ereli said. He added that the Kurds themselves have expressed a commitment to a unified Iraq.

Iraqi Turkmen Front (ITF) Chairman Faruk Abdullah Abdurrahman said on Friday that Turkmens had always voiced that a federation would harm Iraq's integrity. Abdurrahman, who came to Turkey following his visit to Cairo, Egypt, told reporters that restoring Iraq's integrity was the most important issue at the moment. ITF Chairman said he met with Egyptian Foreign Minister Ahmed Maher and Arab League Secretary General Amr Moussa during his visit to Egypt and informed them about developments in Iraq. /AFP-Anatolia News Agency-Turkish Daily News/

TALAT-EROGLU COALITION EFFORTS COLLAPSE, TURKEY IN FAVOR OF DENKTAS AS CHIEF NEGOTIATOR IN CYPRUS TALKS

The week after Turkish Cypriot President Rauf Denktas gave mandate to Republican Turkish Party (CTP) leader Mehmet Ali Talat to form the next Turkish Republic of Northern Cyprus (TRNC) government, Talat announced on Monday that negotiations with National Unity Party (UBP) leader Dervis Eroglu collapsed. The UBP leader and outgoing Prime Minister Eroglu also confirmed that he has closed the possibility of joining a coalition under Mehmet Ali Talat’s CTP. The disagreement between the two leaders erupted after Eroglu sent Talat a letter demanding the CTP leader to respond to questions on the U.N. Cyprus plan.  The letter has been unwelcome by Talat, who said the letter was an insincere and careless move to waste Talat’s limited 15-day mandate to form a government.  In return, Eroglu said it was odd that the CTP, which had long defended the plan conditionally, refused to answer 17 critical questions laid out in his letter. Meanwhile, Talat announced that CTP has also sent Eroglu a letter asking UBP to prove its commitment to the Cyprus settlement based on the Annan plan.

The same day the two officials announced that CTP-UBP negotiations failed, Talat held separate meetings with Democratic Party (DP) leader Serdar Denktas, the son of President Rauf Denktas, and Peace and Democracy Movement (BDH) leader Mustafa Akinci, in an attempt to form a CTP-BDH-DP coalition, necessary to secure a majority. DP leader Denktas announced that the results of his meetings with Talat would be announced by Wednesday this week. Talat has previously cautioned that another round of elections, which will be the case if the Turkish Cypriot leaders fail to form a coalition government, would leave no time for a Cyprus settlement prior to the critical May 2004 date, when the Greek Cypriot administration is set to join the EU.

Foreign Minister Abdullah Gul, during an interview with CNN-Turk television said the Turkish government supports Denktas as the chief negotiator in the Cyprus talks.  ''President Denktas has become a symbol in TRNC. We want him to carry out negotiations after the new government is formed in TRNC as the leader of Turkish Cypriot people.” Gul stated.

Meanwhile, Turkish General Staff issued a statement on Monday rebuffing recent media claims that there was a rift between the military and the government on Turkey’s Cyprus policy. The statement denied reports that the military opposed a draft plan to be put forward by the Foreign Ministry to help UN sponsored efforts to resolve the deadlock. These proposals include reducing the number of Turkish troops stationed in the TRNC. “The report does not reflect the truth,” the General Staff statement said. “The Turkish armed forces believe in the importance and necessity of finding a just and durable solution to the Cyprus problem through negotiations.” Earlier on Monday, the Foreign Ministry issued a similar statement, denying any rift between the government and the armed forces. “The Ministry continuously holds necessary consultations and makes constructive evaluations since the launch of preparations to determine the position of Turkish side in a possible Cyprus talks process,” the statement said. On December 30, the Turkish government said it would invite Turkish Cypriot leader Rauf Denktas to a meeting in Ankara on jumpstarting the settlement talks. /Turkiye-NTVMSNBC-Cumhuriyet/

BUSH URGES GREECE TO PUSH FOR CYPRUS SETTLEMENT

US President George W. Bush sent a letter to Greek Prime Minister Costas Simitis urging him to immediately revive negotiations on Cyprus settlement.  In his letter, dated December 26 but not made public until January 2, Bush stressed that 2004 would be "of great historic importance for Cyprus" because of its accession to the EU. "We now have a window of opportunity to reach a settlement so that a united Cyprus joins the European Union. We must not let that window close," Bush continued. "With the elections in northern Cyprus behind us, the parties should return to the negotiating table immediately, under mediation by United Nations Secretary General Kofi Annan. /AP news/

ISRAEL APPROVES DEAL TO BUY WATER FROM TURKEY IN RETURN FOR ARMS

Energy Minister Zeki Cakan and Israeli Prime Minister Ariel Sharon reached a deal Monday for Israel to buy up to one billion cubic tonnes of fresh water from Turkey over a period of 20 years. Under the agreement, first tentatively reached in October 2002 after more than 5 years of negotiations, Israel is to buy 50 million cubic metres of water from the Manavgat purification plant near the Mediterranean city of Antalya. Two members of Israeli Prime Minister Ariel Sharon’s cabinet, Finance Minister Benjamin Netanyahu and Meir Sheetrit, voted against the deal, citing the high cost when compared to Israel supplying its needs through desalination. The Turkish water will be transported to the Israeli port of Ashkelon via tankers, each capable of carrying 200-250 tonnes.  According to the deal, Turkey in return will buy an unspecified number of Israeli tanks as well as air force technology. /NTVMSNBC-Sabah/

VERHEUGEN REBUKES GERMAN OPPOSITION TO TURKEY’S EU ACCESSION; SAYS EU MEMBER STATES WILLING TO ACCEPT TURKEY IN POST 9/11

European Union Commissioner Guenter Verheugen, during an interview with Berlin’s Inforadio, criticized Germany’s Christian Democratic Union (CDU) opposition to Turkey’s EU accession.  “Turkey has earned its candidate status,” said Verheugen. “This decision was made with the support of countries where Christian Democrats are in power, which is why questioning Turkey’s status now is pointless. Turkey will of course join the ranks of the EU if Ankara fulfils the Copenhagen criteria in its entirety.” Verhuegen also called on the CDU and the Christian Social Union (CSU), which have cited cultural and religious differences in their opposition to Turkey’s bid, not to exploit this issue for the sake of domestic politics. In his interview, Verheugen also said the heads of European Union member states want Turkey to join the European Union, especially in the post-Sept. 11 environment. “Back in 1999, the EU leaders were not very keen on Turkey’s membership,” said Verheugen. “But now most leaders want Turkey to be a part of the Union for foreign policy and security reasons in the wake of the Sept. 11 attacks.” /Hurriyet-Aksam/

TURKEY BEATS IMF-BACKED INFLATION TARGET FOR 2003

State Institute of Statistics released Turkey’s inflation figures in 2003 as 18.4 percent, below the 20 percent year-end target set in an IMF backed economic recovery program. Consumer prices rose by 0.9 percent in December from the previous month, bringing inflation to 18.4 in the past 12 months, the institute said. Wholesale prices increased by 0.6 percent in December compared to November -- up 13.9 percent over the past 12 months and also below the IMF-backed target of 16.5 percent, it added. This was the second year in a row that Turkey beat its inflation projection. In 2002, the country brought inflation down to 29.7 percent from 68.5 percent in 2001, beating its year-end target of 35 percent. Cutting inflation is a key element of a 16-billion-dollar stand-by deal Turkey signed with the IMF after a severe financial crisis in 2001 plunged the country into its worst recession since World War II. Economy Minister Ali Babacan recently assured investors that the economy is strong enough to withstand shocks and pledged that the government would continue to implement IMF-backed policies. Ankara is planning to bring inflation down to 12 percent in 2004 and then to single digits in 2005. /AFP-Turkish Daily News/

SYRIAN PRESIDENT AL-ASAD DUE IN TURKEY       

President Bashar Al-Asad of Syria will pay an official visit to Turkey on January 6. He will be the first Syrian president paying an official visit to Turkey in over 50 years. In an interview with Milliyet daily, President Al-Asad said that the problems in the past stemmed from lack of dialogue between the two countries. He noted that President Ahmet Necdet Sezer, who traveled to Syria in 2000 to attend the funeral of his father, made significant contributions to improvement of bilateral relations between the two neighbors.

TUSIAD released the 16^th issue of its opinion series in Turkish, addressing European Union’s environmental policies: Gorus Dizisi: Avrupa icin Temiz Hava is available at www.tusiad.org