While Turkey awaits aid, embargo hurts economy

October 22, 1990|By Diana Jean Schemo | Diana Jean Schemo,Paris Bureau of The Sun

PARIS -- Though the international embargo on Iraq is expected to cripple the already weak Turkish economy, solemn pledges to support that front-line state with billions of dollars of foreign aid have so far failed to materialize.

Last month, U.S. Secretary of State James A. Baker III flew around the world seeking commitments from U.S. allies to help Jordan, Turkey and Egypt offset the costs of maintaining the embargo against Iraq.

His tour was hailed as a grand success. The Germans promised Turkey $71 million, and Tokyo promised $2 billion to the three states, including $600 million in immediate emergency assistance. Sheik Jaber al-Ahmad al-Sabah, the exiled but still very wealthy emir of Kuwait, promised $2.5 billion. The European Community, before it was even asked, pledged $1.5 billion.

But Turkish officials are complaining that the grand promises of the United States' allies have so far not been backed by a cent of aid.

"There's a storm in the air. We hear the thunder, but we don't see the rain," said Hakki Akil, first secretary of the Turkish Embassy here.

Though Jordan has had perhaps the most difficult burden of the three in accepting hundreds of thousands of refugees fleeing Iraq, Turkey has accepted the closeout of a vital trade partner that provided thousands of jobs for Turkish workers and millions of dollars in revenues.

Among the most severe losses for Turkey is a rash of cancellations from tourist groups. Giltekin Ozkan, head of the Turkish Tourism Bureau here, said tourism had increased 20 percent from January to July this year.

But since September, the tense standoff with Iraq has brought cancellation rates of 5 percent to 15 percent from French tour groups, Mr. Ozkan said.

The Ankara government estimates the damage of the Iraqi embargo over the next year at $4.5 billion, in lost contracts and projected revenues that will not be realized.

Because of the embargo, Turkey has closed the two oil pipelines that transported 1.6 million barrels a day from Iraq. The oil refinery at Kale, in southern Turkey, has shut down. About 7,000 long-distance truckers who hauled goods between the two countries are out of work, while the roadside restaurants and other businesses that served them struggle to survive. The embargo has cost $400 million in construction and trucking contracts as well as $300 million in unpaid transit fees.

An estimated 9,000 Turks who were working in Iraq are now unemployed, said Mr. Akil. Turkey is also out $500 million a year that it collected on its $2.9 billion worth of contracts with Iraq.

"For us, the situation was very difficult," he said. "When you participate [in the embargo], you lose a lot. When you don't participate, you lose a lot but you also gain a lot."

Still, Mr. Akil said Turkey did not have to think twice before refusing an Iraqi offer to supply it with two years of free petroleum if it would break the United Nations embargo.

"Turkey has always opted for Western values," Mr. Akil said, insisting that Turkey was not joining the embargo out of hope that the European Community would look more favorably on its longtime application for membership.

"Whether Europe accepts it or not, Turkey has these values," he said. "We've shown that we are a faithful partner."

Not only has Turkey forgone free oil, but it has lost the preferential price on oil that Iraq had given it before the crisis. Since July, Turkey's oil prices have tripled.

In September alone, prices at the gas pump shot up 87 percent. Inflation, which has troubled the Turkish economy for years, continues to wreak havoc. Wholesale prices rose 5.3 percent last month, compared with a 3.9 percent increase in September 1989.

Mr. Akil said that more than the promised aid, Turkey would value the opening of new markets to compensate for the loss of business with Iraq. Turkey is hoping the European Community will either raise or eliminate its quotas on Turkish textiles. "We've lost a great market. What we need is more commerce, not assistance," the Turkish envoy said.

So far, the ousted Kuwaiti emir has gone furthest in establishing the means to send assistance with the opening of bank accounts that could be used to transfer the promised aid to the Turkish treasury.

A Japanese diplomat, who asked not to be identified, promised that at least part of the promised $600 million in emergency aid would be sent before year's end.

But for all of Turkey's trouble and loyalty in standing firm against Iraq, the country has little more than promises to show as the embargo's tremors begin to shake through Turkey's economy.

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