Turkey calls for aid in return for armies

By SHIHOKO GOTO, UPI Senior Business Correspondent  |  Jan. 15, 2002 at 6:21 PM
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WASHINGTON, Jan. 15 (UPI) -- Less than 12 months ago, Turkey and Argentina both seemed destined as emerging markets that were heading for financial disaster.

What a difference a year makes.

While Argentina's economic future looks increasingly bleak, Turkey's prospects look far brighter, and Turkish Prime Minister Bulent Ecevit was not shying away from publicizing just how far the country has rebounded with assistance from international financial institutions. Ecevit also made clear that it was in the United States' advantage to keep Turkey's economy on track, given its importance militarily in the fight against terrorism.

"Sept. 11 has not helped matters ... but we have made progress in opening up markets and restructuring the economy," Bulent told business leaders gathered at the U.S. Chamber of Commerce Tuesday, his first day in Washington.

Accompanied by nearly two dozen officials, including Economy Minister Kemal Dervis, Ecevit will be here until the end of the week, meeting with President Bush as well as the International Monetary Fund's Managing Director Horst Koehler and Treasury Secretary Paul O'Neill, amongst others.

Since it floated the lira early last year, effectively leading to the currency's devaluation, Turkey's economy nosedived as the lira lost more than 50 percent of its value against the U.S. dollar, while inflation soared near 70 percent.

But while unemployment continues to plague the country, and societal strife within Turkey remains, U.S. investors and the government alike appear to be more willing -- and more pressured -- to support Turkey.

"Turkey has the second largest NATO army ... and we have a strong partnership with the United States under crisis," Ecevit said.

While the premier will be hoping to encourage more U.S. businesses to venture into Turkey, his primary objective for the next four days is to secure more financial assistance from both multilateral agencies and the U.S. government while Turkey's military commitment against terrorism is particularly needed.

After all, Turkey is the sole Muslim country in the North Atlantic Treaty Organization, and its geographic location makes it a critical foothold for U.S. troops into the Middle East.

Meanwhile, Turkish troops have been active in Afghanistan as part of the multinational peacekeeping efforts, offering to take over as leader of the troops when Britain's term in the position expires next month.

Admittedly, Turkey has made steady progress in getting its finances back in order since the IMF provided $19 billion since last year, unlike Argentina, which has been forced to default on its massive debt even after securing loans from multilateral agencies. Still, the country has a long way to go before its finances are in order, while Turkey's internal politics remain shaky, with conflict among the more conservative Muslim sectors of the population clashing with the more Westernized and secular populace.

Moreover, Turkey has seen its military expenditure soar since the Sept. 11 attacks, with $5 billion worth of U.S. military debt. So while Ecevit is vying for further financial aid to tackle the lingering problems of bad debts plaguing the Turkish banking system and endeavoring to bring down the government's high public expenditure, he is also hoping to negotiate more favorable terms for Turkey's export businesses such as textiles in return for the country's continued military commitment.

It is widely believed by international investors that the Turkish government is angling for a further $10 billion in assistance later this year from the IMF alone, and the IMF in turn has indicated that it is satisfied with the progress Turkey has made thus far to reform its economy.

Meanwhile, Ecevit met with World Bank President James Wolfensohn earlier Tuesday, and the premier suggested that the bank too would be prepared to contribute more to ensure Turkey's steady recovery.

But while the Sept. 11 attacks may have increased Turkey's leverage on the global arena, Ecevit is also keeping the more traditional role of a leader of an emerging market; that as the head of a business roadshow.

In fact, when introducing the prime minister, the Chamber of Commerce's President Thomas Donohue made a point of reeling off a number of company names that had sponsored the luncheon, perhaps indicating the degree to which U.S. businesses are hoping to be profitable once again in Turkey.

Ecevit will be meeting with Bush Wednesday when both financial aid and military alliance will be discussed.

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