Turkey

A short four months after Turkey’s pre-war refusal to allow the US permission to open a ‘northern front’ in Iraq from Turkish territory, relations between the two NATO allies reached a new low this month. This followed the July 4 detention of 11 members of Turkey’s special forces by US soldiers in the Northern Iraqi city of Sulaymaniyah. The detentions were the result of US intelligence reports that the Turkish soldiers were planning to assassinate the governor of Kirkuk. Most Turks, however, saw the raid as a retaliatory snub for Turkey’s position during the Iraq crisis - and as a move designed to undermine Turkey’s presence and influence in Northern Iraq.

In an attempt to bring Turkish law in line with requirements set forth by the European Union, the government submitted a package of laws last week to parliament. Turkey's powerful military, long a supporter of the country's drive toward EU membership, has objected to some elements in the 19-article package, considered by many observers to strike at the military's considerable political influence.

With the country's leaders now finally included in the European Union family photograph, thanks to June's EU Thessalonika summit, a new mood of optimism has been evident in Ankara. A determined rash of new, EU-oriented legislative reform and a thawing in relations with the US have also added to the feeling that Turkey is entering the summer months in much better shape than some had predicted. Onlookers at the International Monetary Fund (IMF), on the other hand, would sound a note of caution. Progress in Turkey's efforts on the European front have been coupled with delays in key reforms required by the IMF

Turkey’s privatisation programme took another step forward this week with announcements on tendering for oil refiner Tupras and alcohol and tobacco giant TEKEL. However, controversy surrounded the successful bid for petrochemical company Petkim by a firm controlled by the Uzan family - who are currently facing a USD3bn lawsuit in New York.

The announcement that a preliminary agreement had been reached merging Turkey’s two smaller mobile phone networks during Italian Prime Minister Silvio Berlusconi’s visit May 12 brought relief on a number of fronts. Not the least of these was that it effectively headed off a potential USD3bn lawsuit against Turkey’s telecommunications regulatory authority. But the deal also served as a positive sign to potential foreign investors, with the government anxious to encourage more FDI and a good return on the year’s first major privatisation – the state alcohol and tobacco giant, TEKEL.