Cyprus PIO: Turkish Press and Other Media, 01-10-24

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From: The Republic of Cyprus Press and Information Office Server at <http://www.pio.gov.cy/>

[A] NEWS ITEMS

[01] Turkey and France conduct secret bargaining on ESDP.

[02] Weston in Ankara: no new proposal on the agenda.

[03] Afghan opposition to meet in Turkey.

[04] Ertug: �Things considered impossible before 11 September could happen in Cyprus�.

[05] Reactions against the so-called �passport draft-law� continue.

[06] Problems in the coalition �government�; Eroglu about to go.

[07] The occupation regime arrests a Turkish Cypriot bearer of a Cyprus Republic passport.

[B] COMMENTS AND EDITORIALS

[08] Program and government wearing out, Dervis melting down..

[A] NEWS ITEMS

[01] Turkey and France conduct secret bargaining on ESDP

�Turkey is prepared to resume talks later this week with Britain and the United States to come to a compromise on Turkey's demands for closer participation in the European Security and Defence Policy. France leads the EU hard line group not wanting to accommodate the requests of countries such as Turkey. But behind close doors Turkey and France have been engaged in tough bargaining over a linkage established between softening France on the ESDP in return for Turkey to ease its policies against French defence companies

It will be a serious blow to France's prestige if Turkey does decide to cancel its contract with French Thales for the integration of the Fast 16 electronic warfare systems on U.S.-originated F-16 aircraft in Turkey's inventory. Behind closed doors, however, both countries have appeared to enter into bargaining -- with France softening the policy that it has been pursuing on the European Security and Defence Policy (ESDP) opposing the further integration of countries to the process, such as NATO member Turkey that is not a member of the European Union. Turkey in turn may adopt a softer position in its negative attitude towards French defence companies if France, leading the hawks in the EU, accept Turkey's requests over the role that it could play in a planned European army.

Initially Turkey took a hard line policy against French defence companies halting talks with them when French parliament adopted the Armenian genocide bill early in January blaming the Ottoman Turks for the massacre of Armenians in 1915. But since then there have been many political developments, such as the further evolution of the ESDP, as well as Turkey's severe economic crisis, with France attempting to take the lead in helping foreign credits come to Turkey.

It now appears that Ankara has been using its lucrative defence industry market against French defence companies to get as much as it can in the ESDP, under which the EU has described Turkish attempts to have a full say in the affairs of the European Army as an infringement of its decision-making autonomy.

Turkish Defence Minister Sabahattin Cakmakoglu initially refused to invite his French counterpart Alan Richard to Turkey due to the genocide bill, however, he met Richard in Brussels last month during a NATO defence ministers meeting.

During that meeting Cakmakoglu did not signal that a new era in bilateral relations would open but rather focused on France's position on ESDP and sought ways to convince his French counterpart of the acceptance of Turkish requests within the ESDP, such as active participation in the decision-making mechanisms in the ESDP at those times the EU decides to make independent operations using NATO's assets and capabilities.

Turkey has been refusing to lift its veto for assured access to NATO assets and capabilities, which will back the EU's planned 60,000-member rapid reaction force, unless its demands are met.

What happens if Turkey cancels the electronic warfare project?

For Turkey, it has also been hard to cancel the electronic warfare project after having negotiations for almost a year with French Thales.

The Turkish General Staff, in a letter it wrote to the Turkish Defence Industries Undersecratariat (SSM) in May, authorized the SSM to cancel the project in retaliation for the genocide bill. The General Staff has written another letter to the SSM to cancel the project, this time on the grounds that the United States has imposed strict policy guidelines over the installation of non-U.S. systems on U.S. aircraft with concerns that this would create inter-operability problems for the U.S. air force.

But both of the General Staff's letters authorizing the cancellation of the French Thales system for the electronic warfare project have received a negative response and reluctance from the military bureaucracy, especially in the air force. This was mainly due to the possible repercussions of a cancellation, both politically and legally. The cancellation of the electronic warfare project with Thales would be a serious blow to the prestige of France, seeking to market the Fast 16 systems to the world through Turkey, while Thales may take the issue to court seeking damages occurring due to the cancellation. But taking into consideration the damage to be inflicted on the French companies bidding in other Turkish defence projects, taking Turkey to court appears to be a small possibility.

It seems that France is now playing its card against Turkey mainly on the political front, reminding Ankara of its weight within the EU as well as its membership in the group of seven (G-7) industrialized countries that Turkey has been seeking to convince to grant additional credit in order to help the economy move in the right direction.

In the meantime, Thales started negotiations with U.S. Raytheon as well as with U.S. ITT to overcome the U.S. restrictions over French Fast 16 systems planned to be equipped on U.S. Lockheed Martin-made Turkish F-16s. In the coming days French Thales and one of the U.S. companies will reach an agreement over a consortium to be established on electronic warfare systems. The aim is to remove all of the obstacles that will be raised before Thales for cancelling the project. Despite this, if Turkey cancels the project it will be a serious blow to France's prestige, recalled a French source.

Aselsan-Mikes merge concerns France

Turkey's local Aselsan has been negotiating with the SSM in cooperation with French Thales for the Fast 16 systems to be integrated on the second batch of Turkish F-16s. In the meantime, Aselsan and Mikes (now Destek), the manufacturer of the ALQ electronic warfare systems equipped on the first batch of Turkish F-16s in use, signed a protocol to merge on Oct. 10. This has been interpreted as a signal that Turkey may return to Mikes for the manufacturing of a developed version of ALQ electronic warfare systems for the second batch of F-16s, replacing Thales's Fast 16 systems.

The reports that Turkey's new Air Force Commander Gen. Cumhur Asparuk, replacing retired Gen. Ergin Celasin, favours Mikes's ALQ systems has created unease on the French side�.

[02] Weston in Ankara: no new proposal on the agenda

After the two-hour meeting, Weston said they had fruitful meetings with Turkish officials within the framework of the ongoing dialogue on Cyprus between the two countries.

"We discussed ways of supporting the efforts of the U.N. Secretary-General," Weston said.

It was stated that the United States wanted to launch a new process for the solution of the Cyprus issue, but that they did not bring any new proposal.

Ankara told Weston that the Turkish position remained unchanged. Weston is accompanied by James Sivers, the head of the Cyprus desk of the U.S. State Department, during his tour to include Ankara, Athens and Nicosia.

Weston was scheduled to meet with Tacan Ildem, foreign policy adviser of President Ahmet Necdet Sezer.

The U.S. diplomat will go to Athens on Wednesday morning.

[03] Afghan opposition to meet in Turkey

"Turkey will host the Afghan council meeting on the weekend, headed by former Afghan King Zaher Shah. The council will consist of 120 members, 50 elected by the Northern Alliance, 50 elected by King Zaher Shah and the other 20 will be elected by the one hundred already elected members of the council. Peshtuns will take part in the council as well, officials said.

The meeting will be held in either Istanbul or Ankara, Turkish officials said.

The Turkish Foreign Ministry was informed about the scheduled meeting on Tuesday with news from Italy and an evaluation meeting was held at the ministry afterwards. The Northern Alliance will be represented by Mohammed Yunus Kanuni, the head of the Northern Alliance Mission.

Besides Kanuni, the spokesman of toppled Afghan President Burhannettin Rabbani, Settar Siret, a university scholar in Saudi Arabia, will participate in the meeting to speak for former King Zaher Shah. Turkey's special coordinator on Afghanistan Aydemir Erman was preparing to leave Ankara on Tuesday to visit New York to meet with Special U.N. Coordinator Lakhdar Brahimi, who was appointed for this mission on October 3.

Turkey was not consulted by the supporters of this idea, officials said. "This is their internal problem," said a senior Turkish official. Nearly all of the related countries, from the United States to Pakistan, are for a broad-based government in Afghanistan.

The participation of the Peshtuns in the broad-based government in the country was seen as a necessity by both Washington and Ankara.

The reasons stated by the diplomats for such a choice are:

****** The Peshtuns are the majority in the country. ****** It is the preference of Pakistan, an important actor in the region. ****** The Northern Alliance's bad record is still in minds.

Turkey to convey support to Perwez Musharraf

During the upcoming two-day visit of President Ahmet Necdet Sezer to Pakistan, Turkey will declare full support for Pakistani leader Perwez Musharraf.

Sezer will arrive in Pakistan on Oct. 25, where he is to be welcomed with an official ceremony at the Presidential Palace.

Musharraf, who took the office as a result of a military coup on Oct. 12, 1999, paid his first visit to Ankara in November 1999, conveying an invitation to then President Suleyman Demirel. Sezer is responding to that invitation, which had been reiterated several times."

[04] Ertug: "Things considered impossible before 11 September could happen in Cyprus"

Asked on the "Aktuel" program of the illegal BRT television whether the USA could recognize the pseudostate, Mr Ertug argued that a lot of things have changed after 11 September and claimed that the recognition of the pseudostate by the USA could not be characterized "an imaginary thing".

In order to support his position, Mr Ertug gave as an example the USA attitude towards the Middle East problem, which as he said, changed after 11 September as the Americans now give preference to Palestine.

[05] Reactions against the so-called "passport draft-law" continue

Communal Liberation Party (CLP) issued yesterday a statement noting that instead of putting bans on the passports the pseudogovernment should exert efforts towards solving the many problems of the pseudostate and mainly the Cyprus problem.

The statement claims also that the "draft-law" "gives support and power" to the policy of the Greek Cypriot side, which "tries to deprive the Turkish Cypriots even of those limited rights they acquired with the 1960 Agreements".

Meanwhile, Ali Seylani, chairman of the so-called "public servants" trade union (KTAMS), issued yesterday a written statement saying that the aim of the "draft-law" is to increase the bans and the arbitrary actions imposed by the pseudostate.

[06] Problems in the coalition "government"; Eroglu about to go

The paper writes that the first stage of the DP mission is accomplished and adds that the aim is the creation of a so-called government with the participation of all the political parties.

Meanwhile, "Yeniduzen" (24.10.01) writes that because of its disagreement on a so-called draft-law regarding the "municipalities", DP refused to participate in the so-called Assembly meeting planned for yesterday.

The paper notes that Mr Cosar and Mr Eroglu left the building of the pseudoassembly and went together to the illegal Embassy of Turkey, in order to help them to overcome the problem.

[07] The occupation regime arrests a Turkish Cypriot bearer of a Cyprus Republic passport

The paper writes that Mr Firat was searched after information received by the so-called police.

[B] COMMENTS AND EDITORIALS

[08] Program and government wearing out, Dervis melting down....

"The draft budget for fiscal year 2002 will be presented to the parliamentary planning and budget commission tomorrow. Finance Minister Sumer Oral will probably once again say he isn't happy about the budget.

As the Turkish economy becomes increasingly dollarized, quadrillions of liras are wrapped in the budget, yet substantial erosion in dollar terms can be spotted.

Turkey's 2000 budget, which was compiled on the basis of a standby arrangement agreed with the International Monetary Fund (IMF) in 1999, totalled $74.6 billion at an average exchange rate of 643,000 to the lira assumed by the State Planning Organization and the Central Bank.

The projected average dollar rate was at 1,233,000 to the lira in the 2001 budget, although it didn't make any more sense after Turkey floated the lira. Based on this assumption the 2001 budget amounts to $64.1 billion, including the supplementary budget.

The 2002 draft budget anticipates a spending of $50 billion at the current exchange rate. At the average exchange rate projected by the State Planning Organization, which is around 1,800,000 to the lira, the budget amounts to $54.4 billion.

State Institute of Statistics figures have already shown that the economy contracted by more than 11 percent in the second quarter of this year. On the basis of figures the U.S. dollar equivalent of the budget decreased by more than $25 billion through the two years the program has been implemented.

This is a fact. Hence it's visible that the program is against the economics theory and rules of social sciences. The objective of the economics theory is to improve the welfare of a society and lives of individuals, to optimise and ensure the distribution of resources.

How could you distribute steadily declining resources to an expanding society in an economically sensible way under the existing program? How could you manage the economy of a country with a budget that has contracted by one third in two years?

Treasury yields in to dollar! Therefore the program is gradually melting down and the government is getting exhausted together with the program. Economy Minister Kemal Dervis, who has personally assumed responsibility for the program, is not around any more. He neither represents a hope as in the first days nor is he reliable in what he says or does.

The program has been built on inaccurate information about Turkey and its economy and has finally drained itself and its engineers after two years.

The IMF is hesitant about supporting the program probably because it can hardly remain together. A $3 billion credit scheduled to be disbursed in September is still on hold. Delay in releasing the loan further hurts the reliability of the program.

Concerns toward Turkey are increasing in international markets because of the IMF's attitude and investors are selling off Turkey.

Approximately 60 percent of bank deposits are kept in foreign currency. There's an estimated $50-55 billion outside the banking system.

Keeping the risks in mind, Turkish citizens and companies are keeping $12-17 billion in overseas banks.

The Turkish Treasury has been transforming its debt to U.S. dollars. The Treasury faces a significant exchange rate risk due to domestic debt, which has been converted to dollars, partly through a debt swap this year.

The Treasury has also been selling dollar-indexed debt during the past four to five months. The exchange rate difference has reached approximately TL 20 quadrillion to date since the day of borrowing.

This means it will become even more difficult to roll over domestic debt.

Political and economic scenarios Some economists are suggesting that debt swap, whereby lira-indexed debt is transformed into dollars and prolonged in maturity, is a partial consolidation and would eventually take Turkey to the point of a full consolidation.

Industry Minister Ahmet Kenan Tanrikulu's statement about domestic debt restructuring plunged markets into turmoil last week. If there will be a restructuring, which actually becomes inevitable under the current circumstances, it should be carried out immediately and the bleeding wound should be bandaged.

Turkey must understand that the IMF, which it has been obeying fully for two years, has questionable knowledge of economics.

It should ring some bells for Turkey and its policy-makers if Stiglitz, a harsh critique of IMF policies who argues that the IMF policies have steered countries into bankruptcy, won the Nobel Prize.

Because the economy is in such a bad shape, various scenarios about politics are created. There are rumours about a government of technocrats, a broad-based parliamentary government, etc. It's speculated that Ecevit will turn over the Prime Ministry and the coalition will remain together under a new structure.

While these speculations are being made up, memories of the 1970s are recalled, when then Prime Minister Nihat Erim handed over his post to finance minister Ferit Melen and the government continued.

Now it's being speculated that Ecevit might turn premiership over to his deputy Husamettin Ozkan, the coalition leaders would withdraw from government, and deputy prime minister seats would be taken over by Kemal Dervis on behalf of the Democratic Left Party (DSP), Yasar Okuyan on behalf of the Motherland Party (ANAP) and Ahmet Kenan Tanrikulu of the Nationalist Action Party (MHP).

It's questionable whether the government could stay in a single piece until 2004.

It's clear that this program will not lead anywhere. If Turkey must move on with the IMF, then the program should be redesigned considering Turkey's realities. Prospective government scenarios could form the infrastructure of this new design.

Purpose of the program

On the other hand, the national industry is about to collapse after two years and the government can't move a finger to save it without the IMF's permission. Whereas, the U.S. and Swiss governments bailed out their airlines through their treasury and banks so that thousands of people don't lose their jobs.

Bush called on the U.S. people to consume and spend money so that the economy doesn't collapse. Those who bail out companies in their own homeland and try to ride out economic recession by boosting expenditures have been urging Turkey not to bail out companies, not to give funds to manufacturers, small and medium-term enterprises, exporters, to cut spending, investments, to sack public workers and civil servants, to phase out farm subsidies.

Then it becomes natural to wonder what purpose this program is actually designed to serve. The program slashed the public sector spending for the sake of downsizing the state. Bank rehabilitation was carried out at the expense of finishing off the Turkish financial sector. The national industry has eventually come to the brink of collapse. Agriculture, farm production, livestock breeding are about to disappear. Neither the IMF nor the EU liked what Turkey did for structural reform and Constitutional amendment. Those who plead with Pakistani coup leader general Pervez Musharraf are wiping off the country's billion dollar debts and unfolding economic support packages, while they are dragging their feet when it comes to Turkey.

Turkey is taking a beating from all sides. Ministers, economy bureaucrats, senior missions that govern the country are nearly begging for another spank and they are beating the hell out of Turkey.

Is there anyone still who doesn't understand the purpose of this program?"

KV/SK

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