Turkey

With hopes all but vanishing of a US financial aid package offsetting Turkey’s war losses, the country’s markets spent last week in gloomy mood. While interest and dollar rates jumped, financial institutions moved fast to try and head off a more general decline.

Despite the release of some healthy looking vital statistics, Azerbaijan’s leaders were in sombre mood after US-led forces invaded Iraq last week. Predictions that the war would lead to delays in major energy projects, and even a strategic shift away from the Caspian and Central Asia, received wide airing.

After parliament’s shock decision against the deployment of US troops in Turkey, the week opened with many measuring the economic cost of this razor’s edge rejection.

While Turkey became the focus at NATO of perhaps the worst rift in US-European relations in decades, back in Ankara and Washington the International Monetary Fund (IMF), the US Treasury and the Turkish government were doing a good deal of number crunching during the week. Up for analysis were the cost of a war and the price of economic reform.

With new figures out this week adding to a growing sense of market unease over Turkey’s economic performance, the government’s ability to deal with a range of tough domestic and international issues was also being put to the test.

New 2002 figures showed the UAE’s banking sector continuing to show robust results in drawing investment, despite uncertainty over Iraq. Meanwhile, UAE Central Bank officials began speculating on future monetary union between Gulf Co-operation Council (GCC) states.