The benchmark Istanbul Stock Exchange was jolted on June 7th on news that Ecevit would not attend the meeting, plunging 3.21% to close at 10 151 points, a fall of 337.1 points compared to Thursday’s close. The central bank exchange rate fell to TL 1 452 000 from TL 1 433 000.
The meeting, called by President Ahmet Necdet Sezer, was meant to mend rifts between the parties over how to proceed with EU-mandated reforms.
An official said the ailing 77-year-old Ecevit, who has been in and out of hospital for over a month for treatment of a variety of ailments, had stayed away from the gathering on the advice of his doctors.
Ecevit also missed on May 28th a meeting of the National Security Council (MGK), the country’s top advisory board.
Worries over the stability of the government and the pace of EU-mandated reforms continue to dog efforts to pull the economy from its worst recession in over 50 years and threaten billions of dollars in loans.
A collection of 175 non-governmental organisations on June 5th urged the government in a statement to muster the “political will” and to take “brave steps” in pushing ahead with the reforms.
Failure to secure a year-end date for talks to begin would mean indefinite postponement of membership, they said.
According to Leyla Tunc Yelitin of the Economic Development Foundation (IKV), an umbrella organisation of business associations that supports EU membership, political resolve is a practical concern.
The IKV worries that Turkey – the sole remaining candidate country not to have started accession talks – will face a tougher task still with an expanded EU should it not qualify for talks to begin by the end of the year.
According to Yelitin, the recent pace of reforms is welcomed but Ankara must be able to point to concrete changes by year’s end.
“The government has done more than promised the EU, it has promised the Turkish people,” she says.
But Ankara remains deadlocked over EU-demanded democratic reforms, including abolishing the death penalty and clearing the way for education and broadcasting in the Kurdish language, and questions are mounting over whether the current shaky three-party coalition can continue.
Main opposition figure and True Path Party (DYP) leader Tansu Ciller stayed away from the meeting, saying on June 4th that there was little point in attending a summit absent of the prime minister.
“If Ecevit isn’t there, it can’t be called a summit,” Radikal newspaper reported Ciller as saying.
“This would mean accepting that there isn’t a prime minister,” she said.
In a statement after the meeting, presidential spokesman Tacan Ildem said the leaders agreed to “urgently finalise parliamentary work aimed at the development of new openings” that will put Turkish law in line with European norms.
The coalition’s far-right Nationalist Action Party (MHP) is against EU reforms, claiming they threaten the country’s national unity.
Leader of the pro-Islamist Felicity Party Recai Kutan, speaking after the meeting, said MHP leader Devlet Bahceli had threatened to walk out of the government over the issue.
“The MHP wishes Turkey to join the EU by preserving our national unity and integrity,” Bahceli said at a press conference after the meeting.
However, Kutan said the leaders had agreed to allow parliament to decide on the reforms.
At jeopardy is a $16bn loan package backed by the International Monetary Fund (IMF) meant to wrest the country from the grip of economic crisis.
And the reform of Turkey’s troubled banks is at the heart of the emergency measures.
Turkey’s beleaguered banks gathered on May 31st to sign onto a plan to restructure the bad debt of firms unable to meet payments after the country was shaken by economic crisis in February 2001.
The World Bank-backed plan, dubbed the “Istanbul Approach,” will allow viable companies to renegotiate new favourable terms with banks.
The Turkish Banks Association, the sponsor of the plan, published on June 6th a list of the 24 banks that signed the agreement. All of Turkey’s 46 banks were urged to sign on to the scheme.
Turkey’s overcrowded banking sector was at the root of the February 2001 crisis, which saw the lira lose half its value and the economy shrink by almost 10%.
The plan, backed by $500m from the World Bank, will allow banks, when no longer hamstrung by expensive debt, to commit more money to lending and investment, adding a much-needed boost to the economy
Director of the World Bank in Turkey Ajay Chhibber on June 7th said the cost of financing the “Istanbul Approach” was still being calculated, with a definite figure expected within three months.
But worries persist that billions of dollars in stabilisation loans could crumble under political infighting.
The World Bank warns in a recent report that reforms of the banking sector should be free of political tampering. The report, prepared by a World Bank delegation in the country in mid-May, says restructuring loans should be the top priority of banks.
“All the attending companies need cash and medium-term credits,” the report says. “There will be a chance given to these companies to enlarge if there is a rise in demand, and to enable them to pay their debts to other companies.”
A crucial audit of Turkish banks’ non-performing loans will be out on June 10th, Economy Minister Kemal Dervis said recently.
A bright spot in the week was the announcement on June 3rd of May inflation figures.
Consumer prices rose 0.6% in May from a month earlier, and wholesale prices went up by 0.4% in May from April.
Dervis on June 4th said the inflation figures are the lowest in over a decade, adding credence to claims that a 35% year-end target is realistic.
Read More from OBG
