Both Turkish and International Monetary Fund (IMF) officials chose to downplay a decision by IMF to postpone a July 3 meeting of its executive board, where a green light was expected to have been given for the release of the second installment of Turkey’s standby loan.
The IMF chose to play hardball because of what it judged was a failure on Turkey’s part to live up to promises to close down a number of banks, and to replace political appointees with professionals on the board of the state phone company, Turk Telekom.
On the surface, both sides expressed confidence that the current impasse could be easily overcome. An IMF official was quoted as saying that the “flaws could be smoothed out in about a week," and a Turkish government spokesperson said that nobody believes that the current problem cannot be overcome.
Certain of the issues were resolved almost immediately. A law that would enable the liquidation of Emlakbank was signed, endorsed by President Ahmet Necdet Sezer on the same day as the IMF announcement.
And a solution appeared obtainable in the case of Turkbank, whose liquidation had been suspended by the country’s high court ruling. In the case of the latter, it seemed that the government could circumvent the legal obstacle by merging Turkbank with Etibank, which also is currently is state receivership.
But when it came to finding a solution to the Turk Telekom situation, the government appeared to be caught between a rock and a hard place. In order to appease the IMF, it may have to instigate a domestic political crisis.
The individual in the spotlight is one Ibrahim Hakki Alpturk, the general manager of the telecom and now the head of new board of directors. The problem is that he is known to be affiliated to the Nationalist Movement Party (MHP), which is a junior partner in the governing coalition.
In agreeing to Alpturk’s appointment, Turkish Economy Minister Kemal Dervis knew that he was risking a confrontation with the IMF, but evidently hoped that it would look the other way, realizing that he could not afford to lose the political support of the MHP for his reform program. As things stand at present, neither the IMF nor the MHP are showing any signs of backing down.
Turk Telekom is turning to be an ongoing nightmare for Dervis, who earlier this year was enticed back to Turkey from Washington, where he had spent 20 years working for the World Bank. It was only in late May that Dervis managed to push through a law permitting the sale of a majority stake in the telecom, after attempts to sell off minority stakes proved unsuccessful.
The new telecom law limits foreign ownership to 45 percent, but does not prevent a majority stake in the company from being sold to a local and foreign consortium.
But Dervis, who already is being touted as a future Turkish prime minister, is entirely dependent upon political support from the fragile three-party coalition that supports the government in the country’s parliament. Two financial crises within the space of several months, a 30 percent devaluation of the national currency and stringent conditions imposed by the IMF have made standing all the more unsteady. ― (MENA Report)
© 2001 Mena Report (www.menareport.com)
