30 April 2001

1. - BBC - "IMF backs Turkey aid deal":

IMF boss Horst Koehler warns that the loan deal has not been sealed yet.

The International Monetary Fund (IMF) has agreed to back Turkey's latest plan for economic reforms with a $10bn loan package.
Speaking at the opening press conference of the IMF's spring meeting, the organisation's managing director Horst Koehler the IMF "stands ready to support Turkey".

Mr Koehler however warned that details of the loan and Turkey's economic programme had yet to be ironed out.

But in his key stateme
nt, Mr Koehler focused on the dange of the global slowdown of economic growth.

Global economy in trouble

"The world economy is going through a very difficult phase," he said. "Policymakers representing our 183 member countries are coming here... to discuss what needs to be done."

Mr Koehler's comments follow the release of the IMF's World Economic Outlook, which predicted that global economic growth in 2001 would be a full-percentage point lower than originally forecast - at about 3.2%, and well below last year's 4.8% growth rate.

"Our best guess is that there will be a marked slowdown but that it will be relatively short-lived," he said.

Fresh economic data published by the US government on Friday morning showed the US economy growing at a 2% annual rate - twice what analysts had expected, but this did little to temper Mr Koehler's remarks.

Growth is slowing - that is the point, Mr Koehler said, adding that no region was picking up the slack.

When asked how the slowdown in the US would affect neighbouring Mexico, Mr Koehler said there was no doubt that it would suffer. But, he added, Mexican President Vicente Fox and his administration continued to follow sound policies.

"Mexico will weather the storm, it will have to weather slower growth... but it will emerge stronger," Mr Koehler said.

Europe's role

During a press briefing on Thursday, IMF chief economist Michael Mussa told reporters that the European Central Bank (ECB) should do more to help the slowing world economy. Some viewed his comments as a sharp attack against the ECB.

Mr Koehler was more ambivalent. He praised Mr Mussa's ability as an economist but was not harshly critical of the ECB. "An interest rate cut in Europe could be helpful," he said.

IMF reform and poverty

Reform of the IMF and assistance to the world's poorest nations are also among topics to be discussed this weekend by fund members, Mr Koehler said.

"Highest on our agenda is further work on early warning of crises," Mr Kohler said. "Good policies are still the best precaution that member can take against crises.

Despite criticism by groups opposing the IMF's strategies for reducing world poverty, Mr Koehler pointed with pride to reductions in debt burdens among 22 nations through the controversial Heavily Indebted Poor Countries (HIPC) initiative.

Critics say HIPC is a failure and have called on the IMF to end the programme and cancel in total all debts owed by the poorest nations.

Strong security

The IMF and World Bank's spring meeting is being held in Washington, DC and will run through Monday. Police and security officials here have readied themselves for the possibility of clashes such as those seen Quebec City last weekend.

A three-day meeting of Western Hemisphere nations there was marred by fiery protests with police responding with tear gas and over 400 arrests.

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2. - Washington Post - "Turkish Market Rises on Promise of Aid":

ISTANBUL

The stock market soared and government officials rejoiced today in response to news that the World Bank and International Monetary Fund would lend Turkey another $10 billion to stave off a threatened financial collapse.

But while welcoming the plan in public, Western investors and key government officials privately say they still need to be convinced that Turkey has the political will to finally enact the reforms that have eluded it for nearly 50 years despite 16 previous IMF programs, including two in just the last year.

Officials at the IMF and the U.S. Treasury who hammered out the new package with Turkey's popular new finance minister said today they were motivated primarily by the desire to bring economic and political stability to a key Western ally in one of the world's most volatile regions.
Turkey's fragile coalition government, which voters hold responsible for a catastrophic economic crisis that eroded the currency's value by nearly 40 percent over the last two months, has been hammered by mass demonstrations and persistent calls for the prime minister's resignation.

Officials in Washington fear that if the coalition is turned out of office, power would fall to Turkish nationalist or Islamic fundamentalist parties that would oppose U.S. policies in Iraq, Iran, the Balkans and Cyprus.

"Turkey will make the very best use of this assistance," embattled Turkish Prime Minister Bulent Ecevit told Reuters news agency in a telephone interview today. "The fact that . . . the IMF has taken a positive stance gives us hope."

In Washington, Treasury Secretary Paul O'Neill said that the tough conditions written into the latest loan package give "high prospects for creating stability and normal financial conditions in Turkey."

"There is no absolute certainty, but there is a high probability that this program works," said IMF Managing Director Horst Koehler. "Why? I think that the Turks have gone through the difficult and painful process of of recognizing reality."

The Turkish stock market bounced up 13.5 percent today and the lira, the country's battered currency, improved slightly against the dollar.

Despite today's events, Turkey's economic and political crisis is far from over. The amount of the proposed emergency package is likely to be less than half of the $25 billion Ecevit originally claimed Turkey needed to recapitalize a banking system that is effectively bankrupt and finance the government's budget deficit while it moves to cut costs and increase taxes.

At the same time, the United States and other industrialized countries rejected pleas from Turkey and top IMF officials that they provide additional lines of credit from their own treasuries to supplement the loans from IMF and the World Bank. The idea was strongly opposed by O'Neill, who argued it was unnecessary, set a bad precedent and would implicitly commit the United States to further assistance if Turkey got into trouble again.

Last week, after Turkey released an outline of its reform package, the financial ratings agency Standard & Poor's downgraded Turkey's credit ratings, citing a "volatile political environment" and the risks that the coalition government "might unravel." The service added that the legal reforms the government is attempting to push through parliament - one of the most important requirements set by the IMF for Turkey to begin receiving the emergency loans - face "a long lag" before implementation.

Legal reform is but one of several actions Turkey must take before any of the new money is released, according to U.S. and IMF officials. In Turkey's highly controlled economy and corrupt political culture, such actions represent dramatic change.

The Turkish parliament must pass legislation requiring a radical overhaul of a floundering banking system where state-controlled banks regularly make loans to politically connected firms or keep workers employed by propping up their unprofitable companies. Turkey will also be required to open its system to foreign-owned banks. In addition, tax collection must be strengthened and agricultural subsidies and tariffs cut back. The plan also calls for privatization of the national telephone company and the national airline.

The IMF laid out many of the same conditions last December when it provided an emergency $7.5 million loan. It was the failure to move toward meeting those conditions that led to the suspension of the program and the sell-off of Turkey's currency, stocks and bonds by international investors.

For O'Neill and several top officials in the Bush administration, the Turkish situation represented an early test of their determination to reduce the size and frequency of international bailouts. O'Neill met several times with Turkey's economy minister, Kemal Dervis, in Washington and, over the last week, spoke almost daily with with Koehler, who was described as relentless in his pursuit of the additional bilateral loans. According to administration officials, the Turkish loans also came up at least three times at White House meetings of the National Security Council.
In sketching out the administration's position in a speech last week in New York, O'Neill argued that the IMF should devote more attention to preventing financial fires than to putting them out.
"As we in the finance ministries of the world talk glibly about billions of dollars of support for policies gone wrong, we need to remember that the money we are entrusted with came from plumbers and carpenters who sent 25 percent of their $50,000 annual income to us for wise use," he told the Economic Club of New York.

In Turkey's case, however, officials said the administration was convinced to go along with a rescue both because of Turkey's strategic importance and because it was a "fire" already burning when the new administration took over in January. And, as they have in the past, administration officials took pains to say this would be the last financial package that the United States will consider for Turkey.

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3. - BBC - "Turkish PM maintains party grip":

Bulent Ecevit has maintained a reputation for honesty

ANKARA / by Chris Morris

The biggest party in Turkey's governing coalition, the Democratic Left, is holding a national congress, which is expected to re-elect Prime Minister Bulent Ecevit as leader with an overwhelming majority.

Before Turkey's economy went into a tail spin in February, there had been persistent rumours that Bulent Ecevit was thinking of stepping down.

But although he is not in the best of health, most observers are convinced he will not leave office at such a delicate moment, with his reputation under a cloud.

It was Mr Ecevit's decision to publicise a row he had with President Ahmet Necdet Sezer and to describe it as a serious crisis which triggered financial turmoil and led to the collapse of the Turkish lira.

He has been pilloried by the opposition and there have been numerous calls for him to resign.

Survivor

But he still holds a strong grip on the party he founded and he believes he is the only man who can hold a stable coalition government together.

He does also have good news coming into this party congress - the confirmation of $10 billion in new international loans.

The government is also beginning to make progress on a programme of far-reaching economic and political reforms which international lenders have demanded.

But the full effects of the economic collapse have still not been felt by ordinary people, and Turkey could be in for a long summer of discontent.

The events of the last two months have left an impression of Bulent Ecevit as an ageing politician, somewhat out of touch with the way the world works.

But Mr Ecevit is a survivor. He was first elected as prime minister more than 25 years ago and he has maintained a reputation for honesty in an often dirty political system.
He intends to leave politics at a time of his own choosing and he believes he still has work to do.

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4. - AFP - "One more dead in Turkish hunger strike; toll at 20":

ANKARA

A hunger strike over Turkish prison reforms claimed another life on Saturday, bringing the death toll among prisoners and their supporters to 20, the Turkish Human Rights Association (IHD) said.

The hunger strikes began last October after the government announced plans for new "F-type" prisons with cells holding a maximum of three inmates, replacing existing jails with large dormitories housing up to 60 people. Backed by human rights activists both at home and abroad, prisoners maintain that they will be more vulnerable to mistreatment when isolated in
smaller units.

Despite the mounting death toll, the government has refused to reconsider, arguing that the packed dormitories are a main factor behind the frequent riots and hostage-taking incidents in Turkey's unruly jails. Fatma Hulya Tumgan, 32, died in Numune hospital in Ankara on the 187th day of her hunger strike, Behic Asci, a lawyer with the Association for Solidarity and Support for the Families of Detainees (TAYAD), said. Tumgan, incarcerated in Ulacanlar prison for belonging to the extreme-left underground Revolutionary People's Liberation Party-Front (DHKP-C), had been hospitalized since December, when paramilitary troops raided jails across the country in a four-day crackdown aimed at breaking the hunger strike. With the latest death, 16 prisoners and four relatives of inmates have starved themselves to death since March 21.

About 800 prisoners are on hunger strike, with about half of them pledging to starve to death, in protest at the introduction of the F-type prisons. Justice Minister Hikmet Sami Turk told a press conference in Nicosia, Cyprus, on Saturday that the hunger strike was "futile" since the F-type prisons had been constructed according to standards set by the United Nations and the Council of Europe, Anatolia news agency reported. The minister said extreme-left movements behind the strike would not hesitate "to designate martyrs among their members and send them to their deaths, in order to win victory for their cause," Anatolia said.

More than 1,000 inmates have been transferred to F-type prisons since the December crackdown, which left 30 prisoners and two soldiers dead, despite a government pledge that the new prisons would not become operational until a social consensus had been reached on their introduction. The protestors, who originally demanded the closure of the new jails, recently signalled that they might abandon their action if the isolation conditions were lifted. But a government bill lifting a ban on terrorism convicts associating with other prisoners in recreational areas, has come under severe fire from human rights activists as insufficient and unsatisfactory. The Turkish parliament is due to vote on the bill next week. The hunger strike has further tarnished Turkey's bleak human rights record, which often comes under fire from its Western allies and the European Union, of which Turkey is aspiring to become a member. On Tuesday Europe's human rights watchdog, the Council of Europe, said Turkey's practice of confining prisoners in small groups in the four F-type jails was "not acceptable and should be ended quickly."

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5. - Turkish Daily News - "Discussion intensifies on the chance for new elections in northern Iraq":

by Saadet Oruc

In light of the positive developments between the two Iraqi Kurdish groups in the last three months, the Washington Agreement, which was signed between the two rival Iraqi Kurdish factions, is to be put back on track.

The Iraqi Kurdish Parliament, which was elected in 1992, plans to meet again to clarify the organization of new elections.

All the efforts are the product of two successive processes, the Ankara peace process and the Washington Agreement, Safeen Dizayee of the Kurdistan Democratic Party (KDP) said on Sunday.

Dizayee drew attention to the certain gains reached between the two Iraqi Kurdish groups in the last three months as a result of meetings of the two groups and the decisions taken in the fields of the economy and politics.

It is being commented that the strategic decision taken by the rival Kurdish group in Iraq, the Patriotic Union of Kurdistan (PUK) to leave and being linked with the outlawed Kurdistan Workers' Party (PKK) opened the way for the rapid reconciliation in northern Iraq and revitalized the opportunities in the Washington Agreement.

The Parliament was elected in 1992 as a result of elections with the participation of the opposition factions in northern Iraq. But, the continuous clashes between the two rival Iraqi Kurdish factions blocked the functioning of the parliament. Each party, the KDP and the PUK, wanted to be dominant in controlling the income of the region, particularly the border revenues from the Habour gate. Successive efforts to make peace between the two groups failed as the two Kurdish groups did not refrain from surprising everybody with their choices of alliance, ranging from states such as Iran and Iraq to the United States.

All the states and organizations wanted to have a say in this region, as the uncertainty regarding the future of these lands caused an attraction difficult to explain. The United States pushed the two groups for reconciliation and for getting out of the orbits of countries such as Iran and Iraq. Following the efforts of U.S. diplomat, the two Kurdish clan leaders were invited to Washington in October 1998 and the Washington Agreement was signed there. The agreement asked the parliament to convene and to clarify a date for the new elections.

Massoud Barzani, the KDP leader will come to Ankara in the first week of May. Prior to the meeting, Turkish Foreign Ministry officials expressed satisfaction regarding the recent steps towards reconciliation in the region during their contacts with the Iraqi Kurdish groups.

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6. - Kurdish Observer - "Ocalan: Kurds in Iran should be more active":

Stressing on the importance of pursuing an independent policy rather than supporting any section, member of PKK (Kurdistan Workers' Party) Council of Leaders Ocalan said that an approach which took a critical stance and national interests as its main ground was accurate both for Iran and for Kurds.

Osman Ocalan explained his views on elections in Iran and stance of Kurds on the program "Carcira" in Medya TV the other day. Ocalan said there was a struggle between reformers and the ones who were willing continuation of the existing system, adding that people was not permitted to take part in arguments. Underscoring that although reformers was powerful they could not make progress, Ocalan said "An argument for change can not lead to a solution if people do not take part in it. As long as not being able to find a solution, Kurds should be critical... They should form an alliance with both sides at the same time being critical."

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7. - Middle East Newsline - "Turkey's military fights budget cuts":

ANKARA

Turkey's military has launched a fight against major cuts in its budget amid Ankara's drive to win up to $15 billion in international loans.

Military sources said Turkish generals have warned the government that national security would endangered if the military makes significant cuts in its $7.1 billion budget. They also warned that Turkey's enemies could take advantage of any weakening in Ankara's defense posture.

''Should we just abolish the army?" Turkish Chief of Staff Huseyin Kivrikoglu asked. "Turkey is not Iceland, Sweden or Luxembourg."

The military has announced the suspension of 32 projects valued at $19.5 billion. Kivrikoglu has maintained that these projects have been delayed, not suspended.

The sources said the military is concerned that the international community will demand both deep cuts in the defense budget as well as commitments that would, in effect, force a Turkish military withdrawal from the disputed Aegean Sea and Cyprus. The concerns have already been aired in meetings with government leaders.