5 March 2001

1. "Turkey Welcomes U.S. Change on Iraq Sanctions", Turkey, a key U.S. ally that shares a 205-mile border with Iraq, last week welcomed the Bush administration's "correct and refreshing attitude" toward revising economic sanctions against Iraq by tightening an embargo on weapons materials and loosening controls on civilian trade.

2. "Turkey's new economy chief looks to summer", Turkey's new economy "superminister" said on Sunday the country faced a decisive month ahead but with "hard work" could struggle out of its financial crisis by the summer.

3. "Conflict is only a matter of time", stating that PUK (Kurdistan Patriotic Unity) and Turkey were preparing an intensive war against PKK (Kurdistan Workers' Party), member of PKK Party Assembly Kani Yilmaz said "As far as we see, Newroz will pass with armed conflicts".

4. "Many defense contractsa could be wrecked in Turkey", Turkish military contracts linked to the lira risk being torpedoed amid the sharp drop in the currency.

5. ""Dialogue and Peace Conference" in Stockholm", "Dialogue and Peace Conference, organized by Sweden Kurdish Institute in Stockholm, started the other day. Intellectuals, representatives of Kurdish organizations and associations give seminars on a number of subjects.

6. "Dervis faces challenge from corruption lobby", all banks and economy related departments affiliated to the DSP are linked to Dervis while the MHP and ANAP refuse to allow the new economic super-minister to control banks and departments under their supervision.




1. - The Washington Post - "Turkey Welcomes U.S. Change on Iraq Sanctions"
:
ANKARA

Turkey, a key U.S. ally that shares a 205-mile border with Iraq, last week welcomed the Bush administration's "correct and refreshing attitude" toward revising economic sanctions against Iraq by tightening an embargo on weapons materials and loosening controls on civilian trade.

"The new look of the administration at targeting only Iraq's weapons of mass destruction and alleviating the suffering of the Iraqi people is something we welcome," a senior Foreign Ministry official who is familiar with the evolving U.S. policy change said Friday. "We can go along with it."

Because Turkey is a front-line state that could be threatened by Iraq's military, but which is potentially a vital trade conduit, its support is critical to the success of any change in the sanctions, imposed by the United Nations after Iraq's 1990 invasion of Kuwait. The massive cross-border smuggling between Iraq and its neighbors, Turkey, Syria and Jordan, played a large part in convincing the Bush administration that the current sanctions are not working and should be revamped.

Other key factors, particularly complaints that the sanctions were hurting Iraq's people but having little impact on its government, had contributed to flagging support among key countries, particularly U.N. Security Council members France, Russia and China. Human rights activists say the sanctions have left Iraq impoverished and contributed to the deaths of more than 1 million people.

Secretary of State Colin L. Powell last week completed a swing though the Middle East, where he found strong support for replacing the broad economic sanctions with ones that would strengthen controls on weapons-related materials and ease restrictions on commercial items intended for civilian use.

"The approach that we have taken in the past is not working today," Undersecretary of State Edward S. Walker Jr. said at a news conference Thursday here in the Turkish capital, where he briefed officials on the U.S. desire to "re-create the consensus in the region where all the countries are working together to achieve the same objective."

"We want to control development of weapons of mass destruction. We want to stimulate trade so that the people of Iraq will not be hurt," he said. "Our guiding principle is that whatever we do, we do not want the impact to be borne by the neighboring states."

Turkey has abided by the U.N. sanctions, but officials complain that doing so has cost the country $35 billion in commerce with Iraq, and they have long argued for some type of relief.
The U.N. sanctions were designed to limit the amount of oil that Iraq can export and to steer proceeds to a tightly controlled escrow account that it may use only for food, medicine and other humanitarian purposes. Independent analysts say Iraq exports about 400,000 barrels of oil a day in violation of the sanctions, about one-quarter of which allegedly goes to or through Turkey. The total covert oil trade puts more than $1 billion a year directly into Iraqi coffers, experts estimate.

The senior Turkish official denied that his country was taking in 100,000 barrels of Iraqi oil a day, saying it was physically impossible. Nonetheless, he said, "complaints that the sanctions are like Swiss cheese might be true, but smuggling has been a part of life in this area, and it's impossible to bring it to zero."

In addition, Turkey is concerned about becoming a target of Iraqi retaliation for allowing U.S. and British planes to use one of its air bases to patrol a "no-fly" zone over northern Iraq. The zone is designed to prevent Iraqi President Saddam Hussein's air force from attacking the area's dissident ethnic Kurds.

Iraqi Foreign Minister Mohammed Saeed Sahhaf said in New York on Monday that his country would not permit the return of U.N. weapons inspectors to verify that Iraq is no longer developing weapons of mass destruction -- a key condition for lifting the sanctions.

The Turkish official, who declined to be quoted by name, said being able to monitor Iraq's weapons programs is crucial. "We are not after weapons of mass destruction, and we don't want to live in an area where our neighbors are producing weapons of mass destruction."


2. - Reuters - "Turkey's new economy chief looks to summer":

ANKARA

Turkey's new economy "superminister" said on Sunday the country faced a decisive month ahead but with "hard work" could struggle out of its financial crisis by the summer.

But the weekend brought an early setback for Kemal Dervis, the World Bank official who was lured home last week from Washington, where he has lived for the last 20 years, to restore international confidence in Turkey and steady markets.

Zekeriya Temizel, charged with overseeing the shaky banking sector seen as the greatest threat to the economy, resigned on Saturday in protest at seeing his Banking Supervisory Board subordinated to Dervis.

Prime Minister Bulent Ecevit, whose row with the president triggered the current crisis, said he had urged him to stay.

"First shock to Dervis," read the Milliyet daily's headline.

Over the course of this week, coinciding with the long Muslim Feast of Sacrifice holiday, Dervis and International Monetary Fund (IMF) officials must draw up a convincing economic plan to replace the three-year IMF-backed program destroyed by market gyrations in the last two weeks.

Ecevit also wants a multibillion-dollar foreign loan deal to follow $7.5 billion granted after a crisis last December.

This time any cash would certainly be more closely linked to reform of a banking sector which, by its distorted structure, contributes to high interest rates and a dramatically widening rift between rich and poor.

Diplomats say the United States is particularly alarmed at the implications of instability in a key ally on the fringes of the Middle East and is inclined to be sympathetic.

"If we can overcome the next three to four weeks, our path will be open afterwards," Dervis told CNN-Turk television news. "We believe we will be successful, but we must all work hard."

Dervis, adviser to Ecevit when he was premier in the 1970s, told the Sabah daily: "I think things will start getting better by early this summer ... I know there are sackings and average wages are low, but we must back this all together as a nation."

The Turkish public will be eager for any crumbs of comfort at the start of a weeklong holiday, or Bayram, soured by fears of higher import prices, soaring inflation and bankruptcies since the lira lost 25 percent of its value against the dollar.

Some companies, eager to pay back loans and avoid punitive interest rates, failed to pay wages ahead of the Bayram. Prices for energy, telephone calls, salt, cigarettes and other items were increased -- inflation "sucked in" by higher import prices.

Statistics released on Saturday gave a tantalizing insight into what might have been for Turkey if it were not for the vagaries of its political culture.

Consumer price inflation fell to an annual 33.4 percent in February, before Ecevit and his president fell out so publicly over the pace of the premier's anti-corruption reforms, rocking the stock market and sending interest rates soaring.

Year-end targets of 10-12 percent -- compared with the levels of up to 100 percent that kept foreign investment at bay in the 1990s -- had admittedly seemed out of reach. But now analysts expect a level around 50 percent.

Dervis said the February figures were pleasing. "They won't be like that in the next two months, but after that we hopefully will see better," he told the Anatolian news agency.

President Ahmet Necdet Sezer said in a holiday message to the nation that crisis measures would be doomed if government did not heed the complaints of industry and the people.

The appointment of Dervis, with broad powers especially in the area of banking reform, was generally welcomed in Turkey. But Ecevit's coalition partners resisted pressure to hand the key planning and privatization portfolios to him -- something that could herald future political conflict.
For those who believe in the need to "clean up" banks and root out corruption, he has the advantage of having spent 20 years out of the quagmire of graft and being beholden to no one.
But for those, including leading trade unions, who see the IMF and the World Bank as bent on humbling Turkey, he may represent nothing less than foreign interference.

World Bank and IMF officials in Ankara to hammer out an economic program to reassure markets when they begin reopening at the end of the week see the chief problem as the faltering system of payment between banks.

Turkey's top 10 banks account for over 70 percent of loans, deposits and total assets. Beneath this tier are many weak institutions that have been making "easy money" through trading in government debt at times of high inflation. The fall in inflation put some in trouble, making the larger ones reluctant to lend to them -- the origin of a crisis last December.

Twelve banks have been taken into administration by the banking watchdog. But the continued proliferation of smaller banks, forced to pay higher interest rates for deposits, still poses a threat to the balance of the system as a whole.


3. - Ozgur Politika - "Conflict is only a matter of time":

Stating that PUK (Kurdistan Patriotic Unity) and Turkey were preparing an intensive war against PKK (Kurdistan Workers' Party), member of PKK Party Assembly Kani Yilmaz said "As far as we see, Newroz will pass with armed conflicts".

NEWS CENTER

Taking part to the REWS program in Medya TV, member of PKK Party Assembly Kani Yilmaz stated that there was a gradual tendency to a war which would contain all the region. Yilmaz said Turkey which was in a deep crisis and PUK tried to get rid of their contradictions by way of a war, adding that now there was a PUK delegation in Ankara trying to convince Turkey for a military operation. Emphasizing that the developments showed that Newroz would pass with armed conflicts, Yilmaz said words to the effect: "At the time being PUK positioned a part of its forces to the high regions. A delegation consisting of 15 people is planning preparations of a war in Ankara. They want to depopulate Keladizê district entirely. There are rumors that the people living in Keladizê would be placed to Karadag. A group of experts from Turkey train peshmerges (South Kurdish guerillas)."

"We are warning England"

Kani Yilmaz pointed out that the attempts in question of reactionary forces in Turkey and South Kurdistan were supported by other powers, adding, "The stance of Europe is also provoking them. Taking Armenian genocide to the agenda has played such a role." Stressing that the latest stance of England was worth to be taken under consideration at such a critical and tense period, Yilmaz said, "England placed us to the 'terrorist organizations' list. This is not a coincidence. They encourage Turkey to war with such a stance. It has no right to do this. In fact England has played an important role as far as international conspiracy against our Leadership was concerned. We have given no damage to them. We are warning, they should give up their stance."


4. - Middle East Newsline - "Many defense contractsa could be wrecked in Turkey":

ANKARA

Turkish military contracts linked to the lira risk being torpedoed amid the sharp drop in the currency.

These contracts include projects for the Turkish procurement of ammunition, military vehicles, software and spare parts.

The losses will affect contracts by Turkish agents for U.S. and Western defense firms. The contractors themselves usually sign supply deals in dollars, rather than in liras.
Over a two-day period late last month the lira dropped 57 percent. The lira has been slowly rising since, but it not expected to return to its former levels.

Confidence in the lira has also been hurt by the political crisis that has accompanied the economic collapse. On Saturday, a key Turkish banking regulatory official, Zekeriya Temizel, resigned in what was believed to have been the result of pressure from the World Bank, which has loaned billions of dollars to Ankara.


5. - Kurdish Observer - ""Dialogue and Peace Conference" in Stockholm":

"Dialogue and Peace Conference, organized by Sweden Kurdish Institute in Stockholm, started the other day. Intellectuals, representatives of Kurdish organizations and associations give seminars on a number of subjects.

ZANA SERIN

The conference began with a speech of Dr. Huseyin Xaliqi. Xaliqi stated that such conferences aimed at taking people of different groups and thoughts together and strenghtening the national dialogue, adding that such activities could contribute to development of democratic culture for Kurds.

After the opening speech, the first seminar was given by Tahiri Xaliqi.

The seminar called "Relationships Between Kurds Living Abroad and Liberation Movement in Kurdistan" considered the affects of diaspora on the liberation movement.

"Kurdish language should become widespread on internet"

A seminar, called "Internet Language and How Much the Kurds Use Internet", by Murat Ciwan took up the matter of how ban on the Kurdish language could be overcome by means of internet. He said that indifference of new generations to their mother tongue could be overcome through internet facilities and use of Kurdish could become widespread.

Naile Aras, giving a seminar on "Civil Society and Kurdish Democratic Movement", stated that where there was violence civil disobedience would be a suicide, adding that PKK (Kurdistan Workers' Party) has created a climate for civil disobedience in North Kurdistan within the last two years. Emphasizing that for civil disobedience to be successful, it would need the solidarity of peoples, interest of media and international watch, Aras added that actions of civil disobedience would be more effective in Turkish metropolitan areas than in Kurdistan.

Chairman of Sweden Kurdish Institute Mirhem Yigit will give a seminar on new strategy and policy of PKK, and Serefhan Ciziri on "HADEP (People's Democracy Party) Experience in Democracy and Human Rights Struggle in Turkey, Siyahos Guhdevzi on "A Study on Medya TV", Ahmet Iskenderi on "Pluralism and Democracy." There are also seminars called "National Conflicts and Armed Struggle", "Peace Culture", "National Unity", "Philosophy of Zoroaster", and "Nationalism and Literature". Representatives of Kurdistan National Congress (KNK) and Berlin Kurdish Institute will make speeches.


6. - Turkish Daily News - "Dervis faces challenge from corruption lobby":

MHP, ANAP UNHAPPY - All banks and economy related departments affiliated to the DSP are linked to Dervis while the MHP and ANAP refuse to allow the new economic super-minister to control banks and departments under their supervision

CORRUPTION LOBBY - Leading business circles fear the corruption lobby, composed of certain politicians, bureaucrats and businessmen who have resisted meaningful and deep rooted economic structural changes will try to undermine Dervis


ANKARA

Turkey's new economic super-minister in charge of leading Turkey out of the financial turmoil will face an uphill battle in days to come, not only because of the ongoing chaos but because of the challenges that will be put up against him by the corruption lobby, Turkish analysts say.

Minister Kemal Dervis has already said the next three to four weeks will be crucial in his efforts to overcome the economic turmoil. Leading business circles in Istanbul and political experts in Ankara say, however, that the more devastating challenges may come from the corruption lobby which is opposed to meaningful structural reforms which Dervis will have to implement to end the crisis.

They say the departure of banking regulatory body chief Zekeriya Temizel, who had declared an all out fight against corruption and thus was instrumental in the jailing of so many businessmen who had plundered private bank assets, may have heartened the corruption lobby. However, the fact that Dervis has arrived to launch a new drive for more substantial banking reforms, which may even end the system that allows the bailing out of banks and lead to the downfall of more banks and corrupt businessmen, may be a source of great discomfort for the corruption lobby which will do its best to undermine the efforts of Dervis, a leading business source said. He asked not to be identified.

The state has bailed out 12 private banks in two years. Turkey has some 80 banks, many of them small private institutions fighting to survive in the market.

"They will try to undermine Dervis by laying political landmines on his path. They will spread false rumors about him and try to weaken Prime Minister Bulent Ecevit's support for him. They may even use bureaucrats to mislead him," the source warned.

One such report were claims that Dervis was quoted as speaking on his cellular phone to an unidentified person telling him "they have ruined the government. Please tell Ecevit I cannot handle this situation. Even I can't save the economy." Reporters allegedly did some lip reading as Dervis was speaking on his cellular phone. Later Dervis denied the report which also appeared in newspapers on Sunday and said: "I did not speak in Turkish. I was speaking in English so all the reports were false."

Meanwhile, the Turkish Daily News learnt that big business circles in Istanbul are giving Dervis all out backing and want him to launch a full scale overhaul of the system. They are concerned, however, that the two coalition partners the Nationalist Movement Party (MHP) and the Motherland Party (ANAP) are not in the mood to cooperate with Dervis.

The MHP controls the State Planning Organization, the Undersecretariat of Foreign Trade as well as the state owned Emlakbank, and ANAP controls the Finance Ministry as well as the Privatization Administration. The two parties refused to give Dervis powers over these state organizations.

Dervis was given power over the treasury and central bank as well as the capital markets board, the banking watchdog, two big state banks and the Turkish Development Bank -- all previously assigned to Ecevit's Democratic Left Party (DSP).

There were claims that MHP leader and Deputy Prime Minister Devlet Bahceli had threatened to dissolve the coalition rather than give up his party's economic responsibilities. Bahceli was quoted as saying he supported the appointment only out of "courtesy to the coalition," but at least Dervis might help Turkey win new loans.

"I don't know Dervis very well. But his being in close contact with world money markets can provide us with the money we need in a short period of time," he was quoted as saying.
ANAP is said to be rather unhappy with the Dervis appointment and wanted its own members to be in charge of economic ministries and departments. ANAP, like the MHP, gave its unenthusiastic consent for the appointment of Dervis.

However, analysts say it would be practically impossible for Dervis to solve anything without meaningful cooperation from the ministries and departments controlled by the MHP and the ANAP.

Dervis met with leading academicians in Istanbul on Saturday to pick their brains on Turkey's economic, social and political problems. He also met Foreign Minister Ismail Cem who pledged his all out backing for Dervis.

Dervis returned to Ankara on Sunday and attended a meeting at the Treasury in the afternoon. He is expected to continue a series of meetings and then fly back to Washington on Thursday to end his World Bank career and tie up the loose ends there before he returns to Ankara.