Turkish Prime Minister Bulent Ecevit emerged from a much-anticipated medical check on June 26th insisting that a slew of nagging ailments would not keep him from returning to work in a few weeks time.
The 77-year-old Ecevit's shaky health has raised questions about the viability of the ruling three-party coalition and its ability to cobble together enough support in the country's fractious political atmosphere to push through unpopular reforms required to join the European Union.
Speaking briefly to reporters on June 26th, Ecevit said he "would be able to carry out his duties fully in two or three weeks," enough time for an injury to one of his ribs to heal. The prime minister has been all but absent from his office for two months, as he has sought treatment for a cracked rib, a spinal injury and a circulation disorder in one of his legs.
Markets have reacted to Ecevit's absence from the helm of government, as Ankara tries to pull off an ambitious juggling act of EU-demanded reforms and a mammoth economic stabilisation package worth billions of dollars backed by the International Monetary Fund (IMF).
Ankara must abolish the death penalty and do away with curbs on broadcasting and teaching in the Kurdish language if the government is to extract from Brussels the year-end start to membership negotiations it so covets. But the changes will have to wait, as parliament went into its summer recess on June 27th.
"The economic problems were not caused only because of my illness," said Ecevit after meeting his doctors.
"I fully believe that our economy will get better," he added.
But Ecevit's assurances did not seem to bolster confidence in the markets, with the day's trading ending on a precipitous downward note. The benchmark Istanbul Stock Exchange (ISE) plunged 5.78% to 8,569, while the lira flirted with all-time lows, at best bids of 1 640 000 to the dollar, and shy of an interbank record low of 1 670 000.
The downward slide on June 26th was helped along by a Standard and Poor's report which said the rating agency had revised Turkey's outlook from positive to stable.
"The favourable economic environment that prevailed in the first five months of this year, with declining forward real interest rates, was cut short by differences within the ruling coalition," the report said.
And nine members of Ecevit's Democratic Left Party (DSP) called on June 26th for the premier to step down.
On the same day, the Central Bank held an auction of Turkish Lira at an average interest rate of 52.25%. The TL deposits, with a maturity of July 21st, 2002, were auctioned at an interest rate high of 52.75%. A total of TL175tr was bought by the bank, as the government tries to pay down its enormous burden of debt.
Mehmet Ali Berand, a leading Turkish columnist, questioned if the prospect of Ecevit sticking it out will not act as an irritant rather than a salve to the country's wounded economy, in its worst recession in 45 years.
"Even if he does not think about his party, he must at least see that, due to the current climate of uncertainty, this country is losing millions of dollars because of the way the borrowing rates are going up," he wrote on June 27th.
"The country cannot afford to let this situation go on for six to eight more months," he said.
However, the Central Bank insists Ankara's $16bn IMF-backed austerity programme will not be derailed by political uncertainty.
"The Central Bank does not expect changes outside the economy to interrupt the programme, whose success is clearly seen by all," the bank said in a statement released on June 28th.
"It is against social interests to give up on the programme, which is bringing much longed-for stability to the Turkish economy," the statement said.
Central to Ankara's efforts at rebounding from its current economic woes is the reform of its banking sector, which was at the heart of the February 2001 economic crisis.
The country's banking watchdog said in a report released on June 27th that the collapse of Pamukbank, which was taken into state receivership on June 19th, was caused by bad loans to group firms.
"The most important problems of the bank were the credits extended to group firms that could not be recovered," the report said.
Credits extended to Cukurova Holding, which was a majority owner in the bank, amounted to TL3813tr or 69% of all of the lender's credits.
"The loans extended to the group firms were not repaid on time and their maturity period was continuously extended by the bank. The bank did not accrue interest related to the credits and did not make collections," the report said.
Mehmet Emin Karamehmet, the chairman of Cukurova Holding, was removed from the board of Pamukbank's sister bank Yapi Kredi, precluding efforts by the group to merge the two.
Yapi Kredi shares fell by around 40% as of the week ending June 28th, since the watchdog's announcement.
