11 December 2001

1. “US begins mediating between rival Kurds amid intense speculation on Iraq”, amid intense speculation the United States will next target Iraq in its war on terrorism, the State Department said Monday it had begun mediating a long-running dispute between rival Kurdish groups in northern Iraq.

2. “Turkey moves closer to EU”, two important developments over the last week promise to drastically improve Turkish relations with the EU.

3. “Turkey- economy out of intensive care?“, Turkey's economy continues to cause concern, but some positive news over the past week is prompting optimism that the worst is over.

4. “Former Cypriot President Vassiliou Addresses European Institute”

5. ”The Words Opening the Door“, columnist Tufan Turenc comments on recent developments on Cyprus.

6. “Last Week's Developments”, columnist Mustafa Balbay comments on last week's developments concerning Turkey's foreign policy.

1. – AFP – “US begins mediating between rival Kurds amid intense speculation on Iraq”:

WASHINGTON

Amid intense speculation the United States will next target Iraq in its war on terrorism, the State Department said Monday it had begun mediating a long-running dispute between rival Kurdish groups in northern Iraq.

Deputy spokesman Philip Reeker said a high-level US team led by Ryan Crocker, the deputy assistant state for Near East affairs, was now in northern Iraq to further Washington's efforts to oust Saddam Hussein by bringing the factions together. Crocker is meeting members of the Patriotic Union of Kurdistan (PUK) and the Kurdistan Democratic Party (KDP) in the first direct US attempt to mediate between the two at their request, Reeker said. "This delegation is the first step in that mediation process," he said, adding that PUK leader Jalal Talabani and KDP leader Masood Barzani had asked for State Department help in overcoming their differences.

Reeker noted, however, that US consultations with both groups was longstanding. The last consultative mission was in February, he said. Crocker and his team will also meet with Turkish officials as part of their trip. Crocker's mission is aimed at demonstrating "continued US engagement with the Iraqi opposition, consult with key players on issues in northern Iraq provide for direct discussions on the status of reconciliation among the Iraqi Kurds and to evaluate implementation of the oil-for-food program in northern Iraq," he said.

Baghdad has reacted angrily to US officials meeting with Kurds and late last month, Saddam repeated an offer to engage the factions in dialogue but was rebuffed. Washington has long sought to build up the Iraqi opposition -- including the PUK and KDP -- in order to topple Saddam but has had little success thus far in finding a military force with the ability to move against him. Advocates of targeting Iraq next in the anti-terror war have noted the key military role played by the anti-Taliban Northern Alliance in Afghanistan.

They have urged President George W. Bush and his administration to back various Iraqi opposition groups so they might play a similar role. Iraqi Kurdistan rose up against the regime in the aftermath of the 1991 Gulf War over Kuwait, leaving the three provinces of Arbil, Suleimaniyeh and Dahuk outside Baghdad's reach. The KDP today controls an area along the Turkish border, while the rival PUK administers areas close to the Iranian border.

2. – Oxford Bussines Week – “Turkey moves closer to EU”:

Two important developments over the last week promise to drastically improve Turkish relations with the EU. December 2nd saw Turkish Prime Minister Bulent Ecevit announce Turkey’s support for the EU sponsored European Security and Defence Policy (ESDP) process. Turkey lifted its objections to the EU's proposed 60 000-strong rapid reaction force after 10 rounds of negotiations between Ankara and Brussels this year.

ESDP

The EU sponsored European Security and Defence Policy (ESDP) process envisages the creation by 2003 of a rapid reaction force composed of military forces from member states. The new force will undertake peace-keeping operations in and around Europe and is designed to be administered separately from NATO. However as most EU members are also members of NATO, any operation the ESDP took part in would require the use of NATO hardware and facilities.

Turkey had opposed this arguing that this might see NATO assets used by an ESDP force against Turkey, should a disagreement between Turkey and Greece ever result in conflict. It had maintained a veto on the process, unless it was also given a veto in ESDP over how those assets were used, and unless it was kept informed of all EU military operations even if they did not involved NATO assets.

Ecevit’s announcement that Turkey would now back ESDP, resulted from the EU agreeing to allow Turkey to be consulted over the use of NATO assets on a case by case basis, however it rejected Turkey’s second condition on the grounds that it would undermine its own authority in the decision-making process.

Turkey’s compromise on ESDP bodes well for the country’s eventual accession to the EU and has resulted in Turkey being offered the chance to take part in a constitutional convention that will discuss the future of the EU from next year. The Belgian Minister of European Affairs Annemie Neyts said on December 4th in Ankara that "we can propose to other EU Council members upgrading Turkey's candidacy status".

However, ultimately Turkey’s acceptance into the EU will depend on it meeting further stringent political and economic criteria, as well as consent from Greece.

Cyprus – an agreement to meet

There was also good news concerning the long running dispute over Cyprus, asDecember 4th saw the first face-to-face meeting between the leaders of the two sides of the divided island for four years.

The one hour meeting between Rauf Denktas of northern Cyprus and Glafkos Clerides of the southern portion of the island saw the two agree to meet gain in January for a full scale resumption of negotiations, with none of the preconditions, which had stalled previous attempts at finding a resolution.

UN-sponsored indirect "proximity talks" over the island halted just over a year ago after Denktas walked out claiming that he would not continue until the international community presented northern Cyprus with some form of recognition.

The agreement to continue negotiations comes in the wake of further indications that the EU is determined to press ahead with admitting the internationally recognized Greek Cypriot state which is held to have met economic and political criteria for membership.

Should the admission of Cyprus continue on its present course negotiations should be completed by December 2002 and it will be admitted in 2004, not allowing the two leaders much time to come to a resolution.

The EU’s apparent readiness to admit Cyprus has drawn barely-veiled warnings from Turkey that it may annex the northern third of the island– which its troops have occupied since 1974 when they intervened to protect the island’s Turkish speaking minority population in the wake of a right-wing coup backed by Greece.

Any such action by Turkey however would seriously affect its own chance of joining the EU, as aside from anything else, Turkish troops would be seen to be occupying part of the EU. Although a de-facto state, the Turkish controlled sector is only recognised as an independent entity by Ankara. Dependant on Turkey for economic support, average per capita income is estimated at around a quarter of that of Greek Cyprus, which is $13 000.

News that talks were to be resumed has been greeted positively both in Turkey and in Cyprus, with the Istanbul Stock Exchange rising by around 3.67%.

Greek Cypriot president Glafkos Clerides has said that he wants the problem resolved before he leaves office in 2003. However Turkish Cypriot president Rauf Denktas warned on December 6th against "over optimism" pointing out that he and Clerides would not be able to "solve everything with two meetings".

3. – Oxford Businnes Week – “Turkey- economy out of intensive care?“:

Turkey's economy continues to cause concern, but some positive news over the past week is prompting optimism that the worst is over. December 4th saw the arrival in Ankara of the IMF mission charged with conducting the 11th review of the ongoing stand-by agreement, amidst reports that Turkey is about to be granted a further $10bn IMF loan. Further good news came with the release of better than expected inflation figures for November, and news of an external current account surplus of $2.5bn for the first nine months of 2001.

$3bn approved, $10bn more on the way

November 28th saw the IMF executive board complete its tenth review of the Turkish economy and approve the release of a further $3bn loan. This followed an announcement on November 15th by IMF head Horst Kohler that he would recommend an additional loan of $10bn to cover Turkey’s predicted financing gap for 2001 and 2002. The details of that loan are expected to be finalized by a new IMF review team currently in Ankara.

Turkish finance minister Kemal Dervis announced on December 3rd that conditions for the new loan will hinge on more effective use of public resources, completion of fiscal reforms and the creation of a climate suitable for private sector production. More specifically the Assistant Director of the IMF Anna Krueger indicated that Turkey should reduce the number and the wages of civil servants. But on the same day the chairman of the Confederation of Turkish Labour Unions Bayram Meral accused the government of siding with the IMF rather than in favour of public sector workers whose retirement rights he claimed would be "dismissed".

Positive signs from central bank

There was more good news in the November statistics released by the Central Bank. These indicated an external current account surplus of $2.5bn for the first nine months of 2001- up from a deficit of $6.9bn for the same period last year, as well as a 74.6% drop in the trade deficit to around $4.1bn, 74.6% down compared to the first nine months of 2000.

There was also good news over inflation

Both Consumer Price Inflation (CPI) and Wholesale Price Inflation (WPI) were 4.2% for November, both better than analysts had expected, but inflation is still too high. The data for November brings the year-on-year CPI figure to 67.3% and the WPI to 84.5%, both higher than the governments targets of 65% and 80% respectively for the end of the year.

The Finance Minister Sumer Oral was also upbeat, claiming that tax revenue for 2001 would beat expectations, reaching around TL38.5 quadrillion ($25.6bn). On December 7th he also mentioned that there would be no additional taxes in 2002, and that the decrease in public deficit would come about through rational spending and cutting unnecessary expenses.

And there was more good news in the form of an increase in the size of an existing 11% February 2005 bond, from 300m Euros to 800m Euros, largely thanks to interest from German investors who bought around 48% of the bonds on offer.

On December 8th the Turkish State Institute of Statistics (SIS) published October industrial production figures, which showed a 13.5% decrease on October last year, but indicated that industrial production had risen 3.8% over September 2001.

Good news on the economy coupled with indications that there would be no attack on Iraq was enough to boost the Istanbul Stock Exchange. By the end of December 6th it had closed at 12 687 points, up from 10 961 points a week previously, helped also by the news that Standard & Poor's, had upgraded Turkey’s rating from negative to stable, and analysts at Moody's recently called Turkey's willingness to carry out structural reforms "encouraging".

All the same one of the largest obstacles to Turkey's continuing economic improvement is the low level of foreign investment. Foreign companies have cited obsolete regulations, leading to excessive bureaucracy and non-tariff barriers on the import of goods, such as long customs procedures.

Such funds are viewed as vital to the recovery of the Turkish economy, which shrank by 8.3% in the first three quarters of 2001 compared with the same period last year- contracting by 8.5% in the third quarter alone, according to the Turkish State Institute of Statistics (SIS) on November 30th.

Officials expect the economy to have contracted by 7.5% to 8.5% for the whole of 2001, and then grow again in 2002 by around 4%, as stated in Turkey's official letter of intent to the IMF last month- figures that the IMF generally believes are feasible.

4. – The Washington Report on Middle East Affairs – “Former Cypriot President Vassiliou Addresses European Institute”:

The Sept. 11 attacks on the Pentagon and New York’s World Trade Center played havoc on international as well as domestic affairs. Dr. George Vassiliou, former president of Cyprus and currently his country’s chief negotiator for accession to the European Union, had just begun a four-day visit to Washington, timed to coincide with a scheduled resumption of U.N.-sponsored negotiations on Cyprus Sept. 12, when the attacks disrupted all plans. A breakfast briefing hosted by The European Institute at Washington, DC’s Jefferson Hotel was initially postponed, but ultimately held on Sept. 13.

European Institute president Jacqueline Grapin welcomed the subdued gathering, offering condolences to Americans and everyone affected by the attacks. Taking the podium, Dr. Vassiliou echoed Grapin, and described the attacks as being “not simply against America, but against our entire civilization.” He expressed the hope that, in responding to the threat, solidarity between the EU and NATO would mark “the beginning of a new spirit that will prevail in the world in order to ensure that the objectives of the terrorists will not succeed.”

Turning to the topic of EU accession, the former Cypriot president said negotiations were going well, with 23 of 29 charters agreed upon and the remaining expected to be completed by next summer. Then, he said, the ratification process would begin.

The big question, Vassiliou noted, is whether a divided Cyprus would be permitted to join the EU. While a solution is desired by all, he stated, it is not a precondition for EU membership. Turkey’s cooperation, he said, which is necessary to resolve the dispute, has not been forthcoming. Nor should northern Cypriot leader Rauf Denktash “think he is going to get separate negotiations,” Vassiliou commented.

The U.S. would like to see Turkey, a NATO ally, join the EU, he observed. “As a European, and a Greek,” Vassiliou added, “I support Turkey becoming a European country.” While the Helsinki summit on EU expansion did not exclude Turkish membership, Vassiliou argued that, because of the conflict between Turks who want their country to move in the direction of Europe and those who don’t, Turkey is not yet ready to join the EU. “Europe will not change in order to join Turkey,” he said. “It must be the other way around.”

Expressing the hope that a united Cyprus would become part of the first wave of EU enlargement, Vassiliou described his country as “a small island, but one which operates a crucial position at the crossroads of Europe, the Middle East and Asia.” Were it to become the external border of the EU, he argued, it could play an effective role in combating illegal immigration, drug trafficking and money laundering.

EU accession, he noted, would have economic as well as political implications. According to Vassiliou, Cyprus would contribute more to the EU than it receives, and would become a net contributor within two to three years. With the accession of Cyprus, moreover, the EU would have the largest fleet in the world, he said.

Noting that regional support for accession is strong, Vassiliou recounted a visit to Israel two years ago, when he asked then-Prime Minister Binyamin Netanyahu why he was so enthusiastic about the possibility of Cyprus becoming an EU member. “Because,” the Israeli leader explained, “if Cyprus joins, Europe will be only 100 miles from Israel!”

“Yes,” replied Vassiliou, “and from Palestine as well.” —Janet McMahon

5. – Hurriyet - ”The Words Opening the Door“:

Columnist Tufan Turenc comments on recent developments on Cyprus.

Friends for almost a half-century Rauf Denktas and Glafkos Clerides have decided to solve the Cypus question follwing a letter sent by Denktas to his Greek Cypriot counterpart. Clerides. He told Clerides that it was time for them to solve the problem without resorting to clashes and not to let the future generations suffer from the same conflicts without resorting to clashes. Clerides replied that he would be ready when Denktas would to attend proximity talks. After Denktas' call of face- to- face talks Clerides answered positively.

They agreed and began to meet. This meeting has shown the whole world that the reason this poblem has dragged on for so many years was that everyone was interfering in it. The European Union and the United Nations should be excluded from these talks.

Even Turkey and Greece should not interfere with Denktas or Clerides, as only these two leaders can solve this question. Both of them have devoted their entire lives to this issue. They set on top of a powderkeg since they have known each other. These two leaders have been subject to pressure not only from the whole world but from their communities as well. What hurts them most is the internal criticism. What is promising is that both leaders have decided not to leave the negotiations until they agree on a solution.

If no one pokes a stick in the beehive, Denktas' diplomacy initiative seems to have put developments on the right track. The leaders will resume their talks on Jan. 13 and begin accelerated negotiations. They have a set a deadline for themselves. They will continue these talks until June. They hope to solve the
question by then.

6. - Cumhuriyet - “Last Week's Developments”:

Columnist Mustafa Balbay comments on last week's developments concerning Turkey's foreign policy.

After an extremely busy week, let's underline the recent developments concerning Turkey's foreign policy! Let's begin with the European Security and Defense Policy (ESDP)...The Prime Ministry announced on Dec. 2 that progress had been made concerning the US-backed ESDP talks between Turkey and Britain. 'We have determined our status within the ESDP,' said a statement from the Prime Ministry. Let's take a look at what went on behind the scenes...

A seven-page document was prepared. From the outset, Turkey had hoped for 100% success on three key issues: 1) To avoid the employment of the rapid reaction forces to be formed as a part of the ESDP against itself. 2) To participate in the EU operations in which NATO facilities will be employed. 3) To take part in the decision-making processes within the ESDP. State officials are saying that the document has eased Turkey's concerns on the above-mentioned issues. It seems that Turkey has done its utmost under the current circumstances. Furthermore, everybody is again optimistic about the Cyprus situation.

In the light of developments surronding the recent meeting between Turkish Republic of Northern Cyprus (TRNC) President Rauf Denktas and Greek Cypriot leader Glafcos Clerides, one can easily assert that Turkey will now have new opportunities to take concrete and positive steps on its path towards full EU membership. And what about the Iraq issue? US Secretary of State Colin Powell said, "We haven't prepared a plan yet, but you know what kind of person Saddam Hussein is." In the days to come, Turkey will try to mediate between the UN and Iraq. If we could succeed in doing this, the results would be beneficial both for ourselves and the region, and Turkey could reap significant revenues from commerce with Iraq to boot.

A summary of Turkey's role in the Middle East is as follows: The only country which has the ear of both Israel and the Palestinians! Both sides place a high premium on their bilateral relations with Turkey! Turkey, along with the European countries, seems to have some serious concerns about the role it will play in Afghanistan.

These are basically economic concerns. For instance, Turkey will have to foot the bill for sending troops to Afghanistan if the UN sends none. But the West is still leaning towards keeping Turkey away from the issue as far as the Central Asian power balances are concerned. One could almost say with a straight face that the only event of worldwide impart last week which didn't affect Turkey directly was the birth of Japanese Princess Aiko!