FINANCE: Geostrategic Gambit Nets Turkey Little

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Jan 20 2002 (IPS) - Turkish Prime Minister Bulent Ecevit begins a new work week back home Monday, following a five-day visit here for which he had little to show in the way of firm financial support for his country’s flagging economy from the United States or the International Monetary Fund (IMF).

This was despite considerable effort to capitalise on Turkey’s historically close relations with the United States and its vanguard cooperation in President George W. Bush’s “war against terrorism”.

Mehmet Ali Bayar, of the Turkish embassy here, told IPS the IMF seemed set to hold off on a hard-sought 10-billion-dollar loan until early next month, rather than in the coming week as was originally hoped. Nevertheless, the diplomat said he was confident the Fund would sign off on the loan with backing from the United States.

Bayar, echoing statements by Economy Minister Kemal Dervis and by IMF officials in recent days, said the agreement had stumbled over the pace at which Turkey is implementing IMF-backed economic reforms aimed at providing greater incentive for foreign investors to enter Turkey. Specific measures include state spending curbs and bank restructuring.

IMF spokesperson William Murray said the Fund’s executive board was expected to meet to review the Turkey loan in two or three weeks. Turkish officials said that, in addition to the 10 billion dollars from the IMF, six billion dollars from the World Bank remains at stake.

Ecevit told reporters here Thursday that, likewise, he had not secured a trade agreement with the United States as originally hoped but added the two sides agreed to set up a commission next month to advance the agenda. Nor did the Turkish premier succeed in persuading U.S. officials to raise new bilateral assistance, lower tariffs, write off some five billion dollars in military debt, scrub quotas on Turkish textiles and steel, or help promote tourism.

Faruk Tabak, professor of modern Turkish studies at Georgetown University, said Ecevit went home empty-handed because “he had unrealistically high expectations.”

“The Prime Minister thought he could capitalise on U.S. plans to strike Iraq, but since that has not actually materialised, he couldn’t make it,” said Tabak.

Since military action against Saddam Hussein’s Iraq remains high on the wish list of a number of key U.S. officials, however, observers would not rule out the possibility that Turkey could yet secure economic deals on the coat tails of U.S. geostrategy.

“I don’t think that Ecevit is going home empty-handed,” said Bulent Aliriza, director of the Turkish programme at the Centre for Strategic and International Studies, a Washington think tank. “Both sides will come with a formula that would allow the U.S. to meet some of the Turkish demands. The U.S. still needs Turkey.” He attributed Washington’s meagre response to Ecevit in part to the slowed U.S. economy.

Turkey supported the 1991 U.S.-led war against Iraq and has complained of losing more than 50 billion dollars in trade with its neighbours as a result of the Gulf War and subsequent economic blockade of Baghdad.

Ecevit’s government has been implementing IMF-endorsed reforms since June 1999 but remains in the throes of acute economic crisis. It has tapped some 15.3 billion dollars in credit from the IMF over the past two years.

U.S. backing is seen as a major factor in continued IMF backing for Turkey, which was the first country with a majority Muslim population to offer troops for a multinational peacekeeping force in Afghanistan.

Such gestures aside, said Aliriza, “Turkey needs to get its own house in order. They have not come up with a good performance on primarily attracting foreign investment. They can do a lot better.”

In line with IMF conditions, the government has pushed several laws through parliament, including a bill approved this month that would put five billion dollars into the ailing private banking sector. But the bill awaits approval by President Ahmet Necdet Sezer.

The European Union (EU) also has made the establishment of a Western-style free market economy a condition for Turkey’s admission to the EU. Like the IMF and World Bank, the EU has been anxious that Turkey end state control over the banking, transport, and communications industries. It also has demanded improved political and human rights.