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APRIL 30-MAY 06 2001 Compiled by the Washington Office of Turkish Industrialists’ and Businessmen’s Association (TUSIAD-US) CONTENTS DERVIS: TURKEY READY TO PRIVATIZE TELECOM State Minister in charge of the Economy, Kemal Dervis announced that the Banking Law would be submitted to the Cabinet of Ministers on Monday for their signature and that differences concerning the Turkish Telecom Law had been settled. Turkey has drafted laws to privatize Turk Telecom and restructure the banking sector - two measures crucial for securing international loans to back the crisis recovery program, the economy minister said Sunday. Turkey's parliament will debate the measures early next week, and passage may help secure $10 billion in loans from the International Monetary Fund and the World Bank, Kemal Dervis told journalists. The IMF's executive board is expected to approve the loan package, designed to ease the crisis, which has seen Turkey's currency plunge and unemployment soar, when it meets in Washington on May 15. Lenders have called on Turkey to privatize Turk Telecom and restructure the banking sector, seen as a key cause of the crisis. Dervis said Sunday the government had agreed on a draft law, which would allow a block sale of up to 45 percent of Telecom shares. ``The state will keep a golden share which will guarantee that we keep control in areas important for our national security,'' Dervis said. Dervis said the banking law would give the state more power to intervene when private banks run into trouble. The state has taken over 13 private banks since 1999, and analysts say banking sector problems were at the heart of the economic crisis that broke out in late February. Dervis was in New York on May 1, and addressed a group of Wall Street investors at the Foreign Policy Association. Dervis said he expected the Turkish economy to contract for the whole of 2001 although growth could turn positive by the end of the summer due to strength in the tourism and export sectors. Minister Kemal Dervis said the next few months would be difficult for Turkey given still high inflation, rising unemployment and falling wage levels in the wake of a February currency devaluation. Turkey expects to receive around $6 billion from the IMF and World Bank by the end of June to help it get its embattled economy back on track. But the country must undertake a series of actions from bank reforms to privatization and spending reductions before the board of the IMF grants its approval and the money flows. Reuters/ Associated Press/ NTVMSNBC/ Please note that the English text of Turkey’s New Economic Program is available at www.treasury.gov.tr PARLIAMENT WAITS FOR NEW BILLS: PRESIDENT SEZER APPROVED ALL THE PRIORITY LAWS SUBMITTED TO HIS OFFICE Turkish Parliament, passing 7 out of 15 priority reform bills so far, is waiting for the other eight bills to be submitted by the Government. Meanwhile, President Sezer approved the Natural Gas Market Law, Central Bank Law and Expropriation Law last week. President Sezer also approved a change in the Anti-terrorism law easing the living conditions in the F-type prisons. On the other hand, Minister of Public Works and Housing, Koray Aydin, said, "Preparation of the new tender bill is completed. We will submit it to the EU Secretariat General for a review by the EU and then we will send it to the Parliament. Everybody agreed on the bill and I expect it will pass through the Parliament rapidly." /Turkiye/ Hurriyet/NTVMSNBC/ Please see our attachment focusing on 7 priority laws that were enacted so far as part of the Turkey’s new economic program. FIRST TURKISH TRAIN REACHES IRAQ AFTER 19-YEAR GAP The first Turkish train to Iraq in 19 years arrived in Baghdad on Sunday as a test run ahead of the resumption of rail services between the two countries. Railroad service between Turkey and Iraq stopped days after the eruption of the 1980-88 Iraq-Iran war. The official Iraqi News Agency said Turkey plans to resume regular train service to Iraq, but it did not say when. Ankara's ties with Baghdad have improved since the 1991 Gulf War in which Turkey took part in the U.S.-led multinational force that drove Iraqi troops out of Kuwait. A new Turkish ambassador presented his credentials on Jan. 19, upgrading the level of diplomatic relations between the two countries. Political relations between the countries, however, are undermined by daily patrols conducted by U.S. and British warplanes to enforce the northern no-fly zone, which was established to protect Kurds from the Baghdad government. Iraqi newspapers reported that Turkish companies would hold a large trade exhibition in Baghdad on Monday and that a 150-strong trade delegation headed by Turkish undersecretary of foreign trade Kursad Tuzmen had arrived in Baghdad on Saturday. In his address to the press Turkish Railways Director General Vedat Bilgin said the trade volume between the two countries was substantial before 1982 and they would try to achieve the same potential once again.Reuters/Associated Press/NTVMSNBC/ "TERRORISM DECLINED IN TURKEY" The US Department of State's annual report on “patterns of global terrorism” pointed to a decrease in the number of terrorist activities in Turkey last year. In its Europe section the report says, “Combating terrorism remained a top Turkish domestic and foreign policy priority as ethnic, Islamist, leftist, and transnational terrorist groups continued to threaten Turkey. In 2000, previous Turkish successes in fighting these groups were consolidated, producing a dramatically lowered incidence of terrorist activity. The Turkish Government remained in the forefront of cooperative international counter terrorism efforts. /Turkiye/ ANOTHER STEP FOR TURKISH-JORDANIAN COOPERATION Turkey and Jordan have taken another step to strengthen relations in the fields of cultural and scientific cooperation. The two countries have enjoyed close relations in the Middle East so far, unlike some other Arab countries, which severely criticized strengthening Turkish-Israeli bilateral relations. The latest agreement focuses on closer cultural and scientific cooperation between Turkey and Jordan, setting the stage for deeper exchange of information on folkloric traditions and archaeological riches. /Turkish Daily News/ MIDEAST COMMISSION COMPLETES ITS MISSION The investigation commission on the Middle East, a member of which is former Turkish President Suleyman Demirel, completed its studies in New York. The chairman George Mitchell will present a final report, signed by the members of the commission, to the US Secretary of State Colin Powell. /Turkish Daily News/ DISPUTE BETWEEN THE MOTHERLAND PARTY AND GENDARMERIE In a written statement issued on Friday, coalition partner Motherland Party (ANAP) expressed regret that the Gendarmerie General Command, which is a military command responsible for maintaining law and order in rural areas and which is technically subordinate to the Interior Ministry issued a statement bypassing the ministry. The Gendarmerie General Command’s written statement issued on Thursday was in response to Yýlmaz’s criticism of the fact that the Gendarmerie General Command, normally a military force that is mandated with restoring law and order in rural areas, should not have been involved in the probe into the energy tender graft. /NTVMSNBC/ ANNUAL INFLATION EXCEEDS 50 PERCENT State Institute of Statistics announced the April price indexes, which are higher than expected. The figures show that the wholesale price index rose by 14.4% while consumer prices went up by 10.3 in April. With these figures, annual inflation rate for wholesale prices reached 50.9 percent while the annual consumer prices rose to 48.3 percent. In March, the wholesale prices had increased by 10.1 percent while consumer prices had gone up by 6.1 percent. /NTVMSNBC/ CEM RETURNS FROM BSEC MEETING IN MOSCOW The Black Sea Economic Cooperation Organization's (BSEC) fourth Foreign Minister’s Council meeting was held in Moscow on Friday. A key item on the agenda was the strained Turkish-Russian relations due to the seizure of a luxury hotel in Istanbul by Chechen sympathizers. Turkish Foreign Minister Ismail Cem held a bilateral meeting with Ivanov, aimed at reducing the tension between the two countries. Following the meeting Cem told the reporters that his conservation with Ivanov had been very productive. /Turkish Daily News/ DERVIS SEEKS SUPPORT FROM OPPOSITION PARTIES State Minister in charge of the Economy, Kemal Dervis, met with the leaders of the opposition parties, the True Path Party (DYP), Republican People's Party (CHP), and Virtue Party (FP), last week, in an aim to inform them about the economic program. Ciller said she was not in favor of supporting the program. CHP Chairman Deniz Baykal expressed his wishes for the success of Kemal Dervis, stating that Dervis had taken a great responsibility. /Turkish Daily News/ GREECE URGES RESUMPTION OF CYPRUS TALKS Greece called on Thursday for a resumption of talks between Turkish Cypriots and Greek Cypriots and said nothing could be better for peace in the region than Cyprus' membership in the European Union (EU). Simitis said it was essential for both sides to restart UN-sponsored talks on the future of the Mediterranean island. "The dialogue... for solving the Cyprus issue has entered a dead-end," Simitis said. "We believe this dialogue is necessary and must continue... from where it stopped last November." UN-sponsored proximity talks stalled late last year when Turkish-Cypriot President Rauf Denktas pulled out, saying he would not attend negotiations unless his demands for the recognition of political equality were addressed. Besides, Greece reaffirmed April 2 that it would veto the expansion of the European Union if the Greek Cypriot administration is excluded, a stand that could put Greece at odds with the EU partners wary of accepting the membership of the divided island. On the other hand, it was claimed that UN Secretary General Kofi Annan's Special Envoy to Cyprus, Alvaro de Soto, prepared a draft for a new formula in order to kick off proximity talks again. According to Greek radio, the formula was presented to Britain, the US, Brussels and Moscow and it was accepted. Meanwhile, it was reported that any reduction in Greek military purchases would not affect the Greek Cypriot Administration's armament policy. /Cumhuriyet/Turkish Daily News/ TURKISH FOREIGN MINISTRY DENOUNCES ATTACK IN MACEDONIA In a statement made by Turkish Foreign Ministry, it was declared that Turkey strongly denounced the killing of eight Macedonian security officials at the last weekend. The attack was made at a time when the Macedonian government was taking serious steps towards redefining the inter-ethnic relations in the country in a healthier manner. /Turkish Daily News/ ATTACHMENT PRIORITY REFORM BILLS ENACTED SO FAR (May 4, 2001) The Bill Amending the Central Bank Law An autonomous Central Bank will be the only authority empowered to make monetary policy. As the single authority on monetary policy, the Central Bank will no longer be subject to political pressures or become an instrument for printing money. The Central bank’s main objective will be to ensure price stability. A Monetary Policy Board (to be set up within the structure of the Central bank) will work out the principles and strategies of a price-stability oriented monetary policy in conjunction with the government. Together with the government, the board will have the power to set up inflation targets and take measures to protect the domestic and foreign value of the national currency. The Monetary Policy Board will be responsible of informing the public about the implementations and also of working out the exchange rate regime to determine the change value of the Lira in terms of foreign currencies in an effective market and also in derivative operations like swap. The Central bank will be above the SDIF, which controls insolvent banks, upon request from BRSB should the Fund’s resources not suffice to meet requirements. If uncertainty arises in the banking system and confidence erodes and, consequently, fund withdrawal accelerates, the Central Bank will have a right to extend loans to troubled banks to cover fund withdrawals. Law Amending the Budget Law of the Year 2001 To make the financial system stable and capable of restructuring the public banks and the banks that are in the Fund, arrangements have been made to the Government Bonds. The changes are geared towards ensuring that the Government Bonds, (which are exported based on various laws) are appropriate to the market conditions and are able to satisfy the conditions for earlier redemption if needed. . The changes also aim to refine the duty loss of public banks and to take the necessary precautions to increase the capital adequacy ratio to the legal levels. Law on Sugar The law establishes a public agency, named Board of Sugar that is authorized to supervise the sugar market. The law also includes the regulations on the production standards, price appreciation, and marketing conditions in the sugar market. Law on The Economic And Social Council An Economic and Social Council, is established for consultation on laws related to economic and social affairs. As provided by the law, the Council will work under the presidency of the Prime Minister and will be composed of the ministers and representatives of public and private sectors. Law on the Natural Gas Market This law aims to liberalize the natural gas market in Turkey. Consequently, the law regulates the importation, transmission, distribution, marketing, trading and exportation of natural gas along with the rights and obligations of people interested in one of these procedures. Law Amending the Civil Aviation Act The civil aviation firms are authorized to appreciate the flight price. The law also amends the procedures for declaring new prices and flight schedules. Law Amending the Expropriation Act This law amends some of the essential points of the Expropriation Act. According to the new regulation, acquisition becomes the main procedure of expropriation. If public authority and the owner of an immovable cannot compromise, public authority can confiscate the immovable. Public authorities cannot expropriate an immovable without supplying its appropriation and |
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