- The Washington Times - Sunday, July 7, 2002

Efforts by Turkey to revive its struggling economy, with help from the International Monetary Fund, face a major hurdle during a summer of political uncertainty, a leading private analyst says.
Attile Karaosmanoglue, chief adviser to the Istanbul Chamber of Industry, told a Washington conference on Turkey that the summer could bring more bad news to already worried international investors and allies.
"Very serious friends of Turkey are expecting some very difficult days in July and August," said Mr. Karaosmanoglue during a discussion on the Turkish economy hosted last week by the Center for Strategic and International Studies.
On June 28, the International Monetary Fund's executive board completed the second review of Turkey's economic performance under the three-year rescue package. IMF officials agreed to permit Ankara to draw as much as $1.15 billion immediately.
With interest rates rising and the stock market falling, investors fear that political paralysis will derail the IMF's economic recovery program.
Prime Minister Bulent Ecevit's deteriorating health has unnerved already fragile financial markets, and some believe the possibility of early elections will destabilize the country further.
Turkish officials must also deal with a huge government debt.
Mr. Karaosmanoglue said that finding the right balance between interest rates, exchange rates and economic growth has proved "to be a difficult thing to do."
Fluctuations in the market result in the "attitude that, 'I'm not the responsible one, and someone else needs to solve this problem,'" he said.
Mr. Karaosmanoglue said rampant inflation is eating into the savings of ordinary Turks and that interest rates of 40 percent or more are sure to have a "massive impact on Turkish debt."
Nevertheless, the Istanbul analyst said he "has not lost long-term optimism on the future of the Turkish economy."
Center President John Hamre, speaking at the forum last week, said that though Turkey must solve its own economic problems, "America does not need to be setting up roadblocks.."
"It is in America's best interest to have a strong and vibrant Turkey," he said.
Faruk Logoglu, Turkey's ambassador to the United States, said Turkey's relations with both the IMF and the World Bank remain solid and that the government has stuck to the economic reform program despite its political difficulties.
"Many basic reform structures have been realized to a point that there is no possibility of" going back, he said. He added that Turkey's efforts to prepare for European Union membership have also boosted economic reform.


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