8 June 2001

1. "NATO's Turkish question", after years of wrangling, the European Union and NATO are close to a deal on the EU's plan to act independently on defence when America does not want to be directly involved. But one sticking point remains: the Turks, full-fledged NATO members but still a long way from joining the EU.

2. "Cakmakoglu: We Are Rightful About E.S.D.I. And We Aren`t Taking A Backward Step", National Defense Minister Sabahattin Cakmakoglu said on Thursday that Turkey cannot be excluded from the European Security and Defense Identity (ESDI) process and that there are not any concessions Turkey can make.

3. "The Kurds have changed", German Defense Minister Rudolf Scharping was called on to support the efforts of the Kurds for peace while speaking at a meeting entitled "German Military Force in Kosovo" in the German city of Moenchengladbach.

4. "Turkish broadcast 'watchdog' law widened to Internet", new Turkish broadcast legislation approved this week widens "media watchdog" controls to the Internet for the first time, the state-run Anatolian news agency said on Thursday.

5. "Russia, Turkey Discuss Economic Ties", Russian Foreign Minister Igor Ivanov opened talks with Turkish officials Friday to increase economic cooperation with NATO member Turkey, saying a trans-Black Sea natural gas pipeline will be finished in 2002.

6. "Study Shows Cyprus as Russia's Biggest Investor", for the first time in Russia's history, more quarterly investment in the non-banking sector came from Cyprus than any other country.

1. - The Economist- "NATO's Turkish question":

After years of wrangling, the European Union and NATO are close to a deal on the EU's plan to act independently on defence when America does not want to be directly involved. But one sticking point remains: the Turks, full-fledged NATO members but still a long way from joining the EU.

NATO's defence ministers convene in Brussels on Thursday June 7th to hammer out the final details of a deal which should, if all goes to plan, finally clear the way for the European Union to develop a degree of self-sufficency in defence-with the blessing of NATO, the 19-member military alliance that will continue to be the main guarantor of Europe's security. If this week's meeting succeeds, the agreement could be sealed formally at next week's mini-summit of the North Atlantic alliance, convened on the occasion of George Bush's first presidential tour of Europe.

In the run-up to that summit in Brussels on June 13th, American, British and Turkish diplomats have been working hard behind the scenes to remove the biggest obstacle to a NATO-wide agreement: the reluctance of Turkey, a key NATO member, to commit the alliance's assets and expertise to European-only operations from which Turkish troops, and political influence, might be excluded.

A provisional deal was worked out in late May, but it has yet to win the formal approval either of the Atlantic alliance or of the European Union. The deal is intended to give Turkey wide-ranging consultation rights ahead of any military operation; to guarantee Turkey's right to participate in any military expedition that used NATO's soldiers or weapons; and to ensure Turkish influence over any military operation in which it is involved, both at the planning stage and in the heat of battle. The proposal stops fractionally short of the explicit veto over European-only operations which the Turks would ideally like.

If the issue of who participates in, and who controls European-only defence operations is a bitterly-contested one, that is partly because the Union is gradually beginning to assert itself as a serious player in the field of security. The EU's foreign policy representative, Javier Solana of Spain, has played a central role in efforts to ward off all-out civil war in Macedonia; and his background as a former secretary-general of NATO seems to provide tangible evidence that the two Brussels-based clubs can work together to keep the peace in Europe and beyond. But the more effective the Union becomes, the more unhappy Turkey becomes about being excluded…

At the root of the dispute is Turkey's fear that any arrangement which upgrades the European Union and therefore downgrades NATO is bound to harm Turkish interests. While Turkey is a pivotal member of NATO, it has been been kept at arm's length, on grounds ranging from human rights to poor economic regulation, by the European Union. Moreover, the European Union includes Turkey's historic rival, Greece. Turkey's worst fear is that the European Union will undertake military operations in the eastern Mediterranean or the Caucasus which directly threaten Turkish interests.

The grand bargain

The "Turkish question" has emerged as the main obstacle to implementing a sort of grand bargain between the United States and its European allies which was worked out nearly five years ago. The terms of the bargain were that NATO's American-dominated command would not merely tolerate, but encourage and assist purely European military operations in cases where the United States did not want to commit its own troops. But the planning-and hence a huge degree of control-of these operations would still be in the hands of NATO's powerful bureaucracy. In this way, the EU could assume "political leadership" without any real danger that it would rush into military adventures that the US opposes, such as the Anglo-French invasion of Egypt in 1956. But Turkey, by refusing to let NATO guarantee the availability of its assets (including its planning expertise) for EU missions, has prevented this grand bargain from being implemented.

Both the European Union and Ankara have been looking to the United States to use its influence to settle the dispute. Turkey wants to be as closely involved in any EU-led military operation as any full EU member; the EU, while understanding Turkey's desire not to be excluded, has fought shy of treating the Turks as equals. The advent of a Republican administration in Washington fueled Turkey's belief that, in the end, the United States would lean on the Union, rather than on Ankara, to give ground in the argument. During a visit to Turkey on June 4th, Donald Rumsfeld, the American defence secretary, boosted those hopes by saying that Turkish concerns about European defence policy were "understandable". Turkey's general staff, meanwhile, said the latest EU statements on European-only defence fell far short of satisfying Ankara's concerns.

Diplomats in western Europe were hopeful that this tough language was merely a prelude to a compromise which would be formally unveiled next week. But Edward Foster, a defence analyst with the Royal United Services Institute in London, predicted that Ankara would maintain a hard line for many a month to come. "Turkey has nothing to lose by hanging tough until the last moment," he said-adding that without the help of the Turkish army (NATO's second biggest), the EU might find it difficult to create a serious military force, as opposed to an institution on paper.

In part because of the Turkish issue, the EU's aspiration to match its economic weight with a degree of military might has so far produced a lot of political heat, though not much fire-power. And yet despite this, some European countries are beginning to concentrate harder on the practice rather than just the theory of defence. Sweden, for example, is moving closer to NATO-by integrating some of its defence planning with that of the Atlantic alliance-while remaining formally neutral. Charles Grant, director of the Centre for European Reform, points out that France, Spain and Italy are all moving rapidly away from conscript armies to professional ones which would be easier to use in multinational deployments in unexpected places. Of the 11 EU members that are also members of NATO, eight are increasing their defence spending, according to Mr Grant-although it is possible to argue the contrary if defence budgets are converted from Europe's rapidly-depreciating currency into dollars. Nevertheless, the continued reluctance of Germany, the EU's linchpin, to spend more on defence is probably the biggest single challenge to the credibility of the Union's defence dreams.

So even if the complex triangular standoff between America, Turkey and the EU can somehow be resolved, that is only the beginning of the Union's emergence as a serious player in security matters. Nothing spectacular, nor even very credible, will happen until the EU's biggest member is prepared to put its money where its mouth is.

2. - Anadolu Agency - "Cakmakoglu: We Are Rightful About E.S.D.I. And We Aren`t Taking A Backward Step":

BRUSSELS

National Defense Minister Sabahattin Cakmakoglu said on Thursday that Turkey cannot be excluded from the European Security and Defense Identity (ESDI) process and that there are not any concessions Turkey can make.

Cakmakoglu told reporters that some people were expecting Turkey to take a backward step and to make concessions.

``We are not taking a backward step. We are rightful. We are in favour of the right. We believe that these realities will be realized by our allies one day,`` Cakmakoglu said.

``The European Union (EU) countries are exerting some efforts which they think will satisfy us. But, when we are informed about these initiatives, we tell them that they do not satisfy us,`` Cakmakoglu also said.

Cakmakoglu noted that the Foreign Ministry, National Defense Ministry and the Office of Chief of General Staff think the same about the ESDI.

The differences in statements and style should not be interpreted as differences in point of view, Cakmakoglu stated.

Cakmakoglu added, ``Turkey has a real power which can be seen. Turkey has the biggest military power and it is the second power following the U.S. Turkey`s geography is clear. The risk areas and its position are clear. Its self-sacrifice, experience and contributions during the cold war era and for 50 years are obvious. The criteria that such a country deserves should be taken into consideration.``

CAKMAKOGLU: TURKEY IS A KEY COUNTRY IN ITS GEOGRAPHY

Cakmakoglu, who is representing Turkey in the spring term meetings of the defense ministers of the NATO countries, told a press conference that Turkey`s participation in the security structures that are being formed within the framework of the European Union (EU) is of vital importance.

National Defense Minister Cakmakoglu said, ``I told the European allies that we should not forget that we will need each other to cope with the crises that may occur in Europe and its surrounding.``

Cakmakoglu continued, ``I said that more efforts should be exerted to solve the issue of the inclusion of the non-EU European allies in the ESDI. I said that we are doing our best to reach a solution and that we expect our other allies and our EU member partners to exert similar efforts. I expressed our belief that a solution can be found on basis of principles adopted in NATO`s Washington summit and confirmed in following NATO meetings if efforts are exerted and if necessary political will is shown.``

Responding to a question, Cakmakoglu said that Ankara does not accept the proposals for a solution brought forward by Britain.

Cakmakoglu noted that U.S. Defense Secretary Donald Rumsfeld gave information about the missile defense project in the meeting and that they agreed that consultations on this issue should be continued.

The mass destruction weapons were also debated in the meeting, Cakmakoglu said.

Cakmakoglu stated that Turkey is closely interested in this issue due to its neighbours, adding, ``the U.S. is bringing forward a global point of view and is making a project work. Evaluations and exchange of views regarding the U.S. proposals will continue. It is early to say anything concrete.``

The defense capabilities initiative was also debated in the meeting, Cakmakoglu pointed out.

Cakmakoglu said that Turkey takes this issue as serious and exerts efforts to mark developments in the areas where there are deficiencies.

Despite this, there may be some projects that the allies cannot implement only by themselves, Cakmakoglu noted.

Cakmakoglu emphasized that to this end, they should take joint steps.

``Turkey is one of the leading allies in regard to the share of its defense spendings in the gross national product (GNP). Despite the recent economic crisis, we are doing our best to prevent the impacts of the crisis on the defense projects,`` Cakmakoglu said.

Cakmakoglu noted that the situation in the Balkans was also discussed in the meeting and added, ``I said that we have to support the new administration in Belgrade and that Kosovo should have a multi-cultural and democratic identity in which people can live in peace and security independent from their ethnic identities and religious beliefs. I also said that the extreme groups should be excluded rather than being supported.``

The NATO meetings will end on Friday.

3. - Kurdish Observer - "The Kurds have changed":

German Defense Minister Rudolf Scharping was called on to support the efforts of the Kurds for peace while speaking at a meeting entitled "German Military Force in Kosovo" in the German city of Moenchengladbach.

ASLAN SARAC

Scharping discussed the Kurds living in Germany while speaking at the Social Democrat Party (SPD) bureau in Moenchengladbach at Rheidt Im Casio the other evening. About 60 people participated in the meeting, including Metin Ersoy and Mulla Golmus, who are both members of the administrative board of the Welate Roj Kurd-German Friendship Society, and representatives from the Moenchengladbach Alevi Association, Foreigners' Parliament, and Greek nongovernmental organizations.

Mulla Golmus, who was invited to the meeting as a representative of the Kurdish people, criticized the stance of the German government on the Kurdish problem. Golmus said that there were roughly 600 thousand Kurds who were victims of war living in Germany, adding that the Kurdish problem was one which now involved Germany. He called on Germany to no longer just remain watching the efforts of the Kurds in Germany for peace.

'Turkey must work much more'

Following Golmus, Scharping took the floor and evaluated developments in Turkey over the past two years. Scharping said that significant developments had taken place but that these were not sufficient to secure a lasting peace, and continued to add the following: "If a minister in Turkey had spoken Kurdish on television two years ago, he would have been expelled. But today the situation is very different. But this does not mean that the problem has completely ended. Turkey must therefore work much more."

Scharping said that he could not accept the criticism that Germany had stood by on the subject of a solution to the Kurdish question, adding, "It must not be forgotten that some Kurds in Germany were involved in violent events before. But at this point that has been reached, Kurds have changed, and it cannot be said that Germany has remained silent."

4 . - Reuters - "Turkish broadcast 'watchdog' law widened to Internet":

ANKARA

New Turkish broadcast legislation approved this week widens "media watchdog" controls to the Internet for the first time, the state-run Anatolian news agency said on Thursday.

Changes to the law on radio and television, approved by Parliament in an amendment late on Wednesday, extends existing laws on "falsehoods and insults" to the Internet and other forms of electronic broadcasting, it said.

Turkey's electronic broadcasting industry fought passage of the law, which will require its roughly 27,000 Web site operators to submit their pages to a prosecutor before publication. New Internet service providers will now be required to seek permission from the authorities before launching operations.

Sector officials said the law would severely curb the activities of Turkish ISPs, already suffering the effects of an acute financial crisis.

It was not clear how the new law would affect Internet service providers using material from third parties based outside Turkey -- a bone of contention in other countries.

Managers have called the legislation repressive and cautioned it could have an adverse impact on Turkey's image as it sought European Union membership.

But Ankara must improve a shaky human rights record, including curbs on freedom of expression, to begin EU membership negotiations.

The new law also maintains strict curbs against Islamist or separatist broadcasts, the news agency said. It boosts fines against those found to have broken broadcasting prohibitions by opposing "the indivisible unity of the state with its people or Ataturk's principles and revolutions."

The law also prohibits broadcasting that breaches "the national and moral values of society and the Turkish family structure." Under such clauses, broadcasting that advocates Kurdish rights, Islamic activism or homosexuality could be penalized, the news agency said.

The law enables media owners to take part in state tenders -- a step journalists' unions warn will only increase the power of media owners such as Aydin Dogan, whose Dogan Holdings contains firms from various sectors already. Stock exchange companies will also be allowed to widen their ownership of media companies under the law, it said.

However, it ends the practice of briefly closing channels that break its rules, but instead orders that the slots of offending individual programmes be replaced by programmes encouraging education and moral development.

5 .- AP - "Russia, Turkey Discuss Economic Ties":

ANKARA

Russian Foreign Minister Igor Ivanov opened talks with Turkish officials Friday to increase economic cooperation with NATO member Turkey, saying a trans-Black Sea natural gas pipeline will be finished in 2002.

The $3.2 billion pipeline to carry natural gas from Russia to Turkey under the Black Sea is expected to increase Turkey's reliance on Russia, the country's number one natural gas supplier.

"This project will be finished as scheduled and the shipment of Russian gas to Turkey will begin in 2002," Ivanov said upon his arrival late Thursday.

On Friday, Ivanov met with Foreign Minister Ismail Cem and will also hold talks with President Ahmet Necdet Sezer and Prime Minister Bulent Ecevit.

The pipeline project, known as Blue Stream, will carry 16 billion cubic meters of Russian natural gas a year through a 750-mile pipeline, from Russia to the Turkish capital, Ankara.

Ships were expected to start laying pipes under the Black Sea this summer. The undersea connection is about 215 miles long. Both Russia and Turkey have largely completed construction of the pipeline on land.

In a bid to diversify its natural gas resources, Turkey is also planning to buy natural gas from Iran next year through a newly built eastern pipeline.

Relations between Russia and Turkey have often been tense, as the two countries vie for influence in Central Asia.

Turkey has long accused Russia of supporting Kurdish rebels fighting for autonomy here, while Moscow criticizes Ankara for being soft against Chechen militants.

6. - Moscow Times - "Study Shows Cyprus as Russia's Biggest Investor":

For the first time in Russia's history, more quarterly investment in the non-banking sector came from Cyprus than any other country.

Analysts say this means that the volume of funds repatriated by Russian companies through their favorite offshore haven is higher than the flow of funds coming from the United States, Germany and other economic giants.

The new data - compiled by the Unicon agency's macroeconomic research center and based on State Statistics Committee numbers - mean Russian companies are increasingly using offshore tax havens to reinvest their profits in Russia, rather than simply keeping their money like they did before the crisis, NIKoil analyst Aleksei Kazakov said.

Overall, foreign investment in Russia is on the upswing, with a total of $2.7 billion committed to the non-banking sector in the first quarter of the year, up from 11.1 percent over the same period last year.

Cyprus accounted for 17 percent of all foreign investments for the quarter, ahead of Holland - another famous haven for capital fleeing Russia - on 14.6 percent and former leader the United States with 14 percent.

Direct investments amounted to $962 million, or 35.4 percent of the total volume, a rise of 12.8 percent since last year. The main branches of industry that received the investments were, as before, the food industry, the metals industry and the oil industry, with 13.5 percent, 10.4 percent and 5 percent, respectively.

Russian companies are not the only ones using Cyprus, however. Foreign multinationals have also set up their own Cyprus "subsidiaries."

When George Soros invested in Svyazinvest through Mustcom, the funds formally came from Cyprus.

Even so, analysts polled said there is no doubt that most of the Cyprus money is Russian money coming back. To understand what kind of investments are being made with the money from Cyprus would require detailed knowledge of Russian companies' economic development, ownership rights and financial flows - things most foreigners do not understand, said Yelena Matrosova, director of Unicon's macroeconomic research center.
Unicon's report has one clause that seems illogical at first glance. Though new investment at the start of this year was higher than for the first three months of 2000, the volume of accumulated foreign investment in Russia's economy had actually fallen by 0.3 percent to $31.9 billion, and the volume of accumulated direct investment had fallen by 1.2 percent to $15.9 billion.

But even these figures can be used as evidence that the economic situation in Russia is improving: Long-term loans are factored in, so as they are repaid, the volume of accumulated investment falls.