PROFILE

OFFICIAL NAME:
Republic of Turkey

Geography
Area: 780,580 sq. km.
Cities: Capital--Ankara (pop. 4.0 million). Other cities--Istanbul (8.8 million), Izmir (2.3 million), Bursa (2.1 million), Adana (1.8 million).
Terrain: Narrow coastal plain surrounds Anatolia, an inland plateau becomes increasingly rugged as it progresses eastward. Turkey includes one of the more earthquake-prone areas of the world.
Climate: Moderate in coastal areas, harsher temperatures inland.

People
Nationality: Noun--Turk(s). Adjective--Turkish.
Population (2003): 68.1 million.
Annual population growth rate (2004 est.): 1.13%.
Ethnic groups: Turkish, Kurdish, other.
Religions: Muslim 99%, Christian, Bahai and Jewish.
Languages: Turkish (official), Kurdish, Zaza, Arabic, Armenian, Greek.
Education: Years compulsory--8. Attendance--95%. Literacy--86.5%.
Health: Infant mortality rate--39.4/1,000. Life expectancy--68.5 yrs.
Work force (23 million): Agriculture--35.6%; industry--17.5%; services--42.2%.

Government
Type: Republic.
Independence: October 29, 1923.
Constitution: November 7, 1982.
Branches: Executive--president (chief of state), prime minister (head of government), Council of Ministers (cabinet--appointed by the president on the nomination of the prime minister). Legislative--Grand National Assembly (550 members) chosen by national elections at least every 5 years. Judicial--Constitutional Court, Court of Cassation, Council of State, and other courts.
Political parties in Parliament: Justice and Development Party (AK), Republican People’s Party (CHP), and True Path Party (DYP).
Suffrage: Universal, 18 and older.
National holiday: Republic Day, October 29.

Economy
GNP: (2002) $179.9 billion; (2003) $239.1 billion; (2004) $293.6 billion (projected).
Annual real GNP growth rate: (2002) (+)7.8%; (2003) (+) 5.9%; (2004) (+) 5.0% (projected).
GNP per capita: (2002) $2,584 ; (2003) $3,383.
Annual inflation rate /CPI (2002) 29.7%; (2003) 18.4%; (2004) 3.87% (Jan-August).
Natural resources: Coal, chromium, mercury, copper, boron, oil, gold.
Agriculture (11.8% of GNP): Major cash crops--cotton, sugar beets, hazelnuts, wheat, barley, and tobacco. Provides more than 40% of jobs, 6% of exports.
Industry (24.9% of GNP): Major growth sector, types--automotive, electronics, food processing, textiles, basic metals, chemicals, and petrochemicals.
Trade: Exports (merchandise) (2002) $35.1 billion; (2003) $46.8 billion; (2004 January-June) $28.6 billion: textiles and apparel, iron and steel, electronics, tobacco, and motor vehicles. Imports (merchandise) (2002) $50.8 billion; (2003) $68.7 billion: petroleum, machinery, motor vehicles, electronics, iron and steel, plastics. Major partners--Germany, U.S., Italy, France, Russian Federation, Italy, Japan, Netherlands, U.K.

PEOPLE
Modern Turkey spans bustling cosmopolitan centers, pastoral farming villages, barren wastelands, peaceful Aegean coastlines, and steep mountain regions. More than half of Turkey's population lives in urban areas that juxtapose Western lifestyles with traditional-style mosques and markets.

Turkey has been officially secular since 1924, although 99% of the population is Muslim. Most Turkish Muslims belong to the Sunni branch of Islam, but a significant number are Alevi Muslims. Questions of the goals of political Islam and the aftermath of the 1984-99 PKK Kurdish insurgency continue to fuel public debate on several aspects of Turkish society, including the role of religion, the necessity for human rights protections, and the expectation of security. Turkish citizens of Kurdish origin constitute an ethnic and linguistic group. Estimates of their population range up to 12 million.

HISTORY
Mustafa Kemal, celebrated by the Turkish State as a Turkish World War I hero and later known as "Ataturk" or "father of the Turks," led the founding of the Republic of Turkey in 1923 after the collapse of the 600-year-old Ottoman Empire and a three-year war of independence. The empire, which at its peak controlled vast stretches of northern Africa, southeastern Europe, and western Asia, had failed to keep pace with European social and technological developments. The rise of national consciousness impelled several captive nations to seek to regain lost independence, leading to the empire's fragmentation. This process culminated in the disastrous Ottoman participation in World War I as a German ally. Defeated, shorn of much of its former territory, and partly occupied by forces of the victorious European states, the Ottoman structure was repudiated by Turkish nationalists whom Mustafa Kemal brought together under his tight leadership. The nationalists expelled invading Greek forces from Anatolia after a bitter war. After the proclamation of the Republic of Turkey the temporal and religious ruling institutions of the old empire (the sultanate and caliphate) were abolished.

The leaders of the new republic concentrated on consolidating their power and modernizing and Westernizing what had been the empire's core--Anatolia and a small part of Thrace. Social, political, linguistic, and economic reforms and attitudes decreed by Ataturk from 1924-1934 continue to be referred to as the ideological base of modern Turkey. In the post-Ataturk era, and especially after the military coup of 1960, this ideology came to be known as "Kemalism" and his reforms began to be referred to as "revolutions." Kemalism comprises a Turkish form of secularism, strong nationalism, statism, and to a degree a western orientation. The continued validity and applicability of Kemalism are the subject of lively debate in Turkey's political life. The current ruling AK Party comes from a tradition that challenges many of the Kemalist precepts and is driven in its reform efforts by a desire to achieve EU accession.

Turkey did not enter World War II on the Allied side until shortly before the war ended and became a charter member of the United Nations. Difficulties faced by Greece after World War II in quelling a communist rebellion and demands by the Soviet Union for military bases in the Turkish Straits prompted the United States to declare the Truman Doctrine in 1947. The doctrine enunciated American intentions to guarantee the security of Turkey and Greece and resulted in large scale U.S. military and economic aid. After participating with United Nations forces in the Korean conflict, Turkey in 1952 joined the North Atlantic Treaty Organization (NATO). Turkey is currently a European Union candidate.

GOVERNMENT AND POLITICAL CONDITIONS
The 1982 Constitution, drafted by the military in the wake of the 1980 coup, proclaims Turkey’s system of government as democratic, secular, and parliamentary. The presidency’s powers are not precisely defined in practice, and the president’s influence depends on his personality and political weight. The president and the Council of Ministers led by the prime minister share executive powers. The president, who has broad powers of appointment and supervision, is chosen by Parliament for a term of 7 years and cannot be reelected. The prime minister administers the government. The prime minister and the Council of Ministers are responsible to Parliament.

The 550-member Parliament carries out legislative functions. Election is by proportional representation. To participate in the distribution of seats, a party must obtain at least 10% of the votes cast at the national level as well as a percentage of votes in the contested district according to a complex formula. The president enacts laws passed by Parliament within 15 days. With the exception of budgetary laws, the president may return a law to the Parliament for reconsideration. If Parliament reenacts the law, it is binding, although the president may then apply to the Constitutional Court for a reversal of the law. Constitutional amendments pass with a 60% vote, but require a popular referendum unless passed with a two-thirds majority; the president may also submit amendments passed with a two-thirds majority to a popular referendum.

The judiciary is declared to be independent, but the need for judicial reform and confirmation of its independence are subjects of open debate. Internationally recognized human rights, including freedom of thought, expression, assembly, and travel, are officially enshrined in the Constitution but have at times been narrowly interpreted, can be limited in times of emergency and cannot be used to violate what the Constitution and the courts consider the integrity of the state or to impose a system of government based on religion, ethnicity, or the domination of one social class. The Constitution prohibits torture or ill treatment; the current government has focused on ensuring that practice matches principle. Labor rights, including the right to strike, are recognized in the Constitution but can be restricted.

The 1982 Constitution provides for a system of State Security Courts to deal with offenses against the integrity of the state. The high court system includes a Constitutional Court responsible for judicial review of legislation, a Court of Cassation (or Supreme Court of Appeals), a Council of State serving as the high administrative and appeals court, a Court of Accounts, and a Military Court of Appeals. The High Council of Judges and Prosecutors, appointed by the president, supervises the judiciary.

In the November 2002 election of Turkey’s 58th government, the Justice and Development Party (AK) captured 34.3% of the total votes, making Abdullah Gul Prime Minister, followed by the Republican Peoples Party (CHP) with 19.39% of the vote, led by Deniz Baykal. A special General Election was held again in the province of Siirt in March 2003, resulting in the election of AK’s chairman Recep Tayyip Erdogan to a seat in parliament, allowing him to become prime minister. AK and CHP were the only parties to surpass the 10% threshold required to hold seats in parliament. The elections resulted in 363 of the 550 seats going to AK, 178 seats to CHP, and 9 as independent. Due to a reshuffle in party affiliation, AK holds 367 seats, CHP holds 175 seats, five are independent, and three joined the True Path Party (DYP). In March 2004 nationwide local elections, AKP won 57 of 81 provincial capital municipalities and, with 41.8% of the votes for provincial council seats, consolidated its hold on power.

Principal Government Officials
President of the Republic--Ahmet Necdet Sezer
Prime Minister--Recep Tayip Erdogan
Minister of Foreign Affairs--Abdullah Gul
Ambassador to the United States--Faruk Logoglu
Ambassador to the United Nations--Umit Pamir

ECONOMY
Turkey began a series of reforms in the 1980s designed to shift the economy from a statist, insulated system to a more private-sector, market-based model. The reforms spurred solid growth, but growth that has been punctuated by sharp recessions and financial crises in 1994, 1999, and 2001. Turkey's failure to pursue additional reforms, combined with large and growing public sector deficits, resulted in high inflation, increasing macroeconomic volatility, and a weak banking sector.

The Ecevit government, in power from 1999 through 2002, restarted structural reforms in line with ongoing economic programs under the standby agreements signed with the International Monetary Fund (IMF), including passage of social security reform, public finance reform, state banks reform, banking sector reform, increasing transparency in public sector, and also introduction of related legislation to liberalize telecom, and energy markets. Under the IMF program, the government also sought to use exchange rate policies to curb inflation.

By late 2000, a growing current account deficit, the weak banking system, and growing concern over the failure to implement needed structural reforms resulted in a liquidity crisis that led to a revised IMF program. In February 2001, a public dispute between the president and prime minister triggered a run on the lira and a dramatic increase in interest rates. The result was rapid inflation, a severe banking crisis, a massive rise in domestic public debt, and a deep economic downturn (GNP fell 9.5% in 2001). The government was forced to float the lira and adopt a more ambitious economic reform program, including a very tight fiscal policy, enhanced structural reforms, and unprecedented levels of IMF lending.

Large IMF loans--tied to implementation of ambitious economic reforms--enabled Turkey to stabilize interest rates and the currency and to meet its debt obligations. In 2002 and 2003, the reforms began to show results. With the exception of a period of market jitters in the run-up to the Iraq war, inflation and interest rates have fallen significantly, the currency has stabilized, and confidence has begun to return. Nonetheless, the economy still remains fragile, and continued implementation of reforms is essential to sustain growth and stability.

Turkey has a number of bilateral investment and tax treaties, including with the United States, that guarantee free repatriation of capital in convertible currencies and eliminate double taxation. Nonetheless, foreign direct investment has totaled only $16,4 billion as of June 30, 2003, a modest sum reflecting investor concerns about political and macroeconomic uncertainty, burdensome regulation, and a large state role in the economy.

Turkey seeks to improve its investment climate and has taken steps to improve its investment climate through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. However, a number of disputes involving foreign investors in Turkey and certain policies, such as high taxation of cola products and continuing gaps in the intellectual property regime, inhibit investment. The Turkish privatization board is in the process of privatizing a series of state-owned companies, including the state alcohol company and the oil refining parastatal. In 2004, the Privatization Board is scheduled to privatize the state tobacco company and the telephone company. Under its commitments to the World Trade Organization, the Government is liberalizing the telecommunications sector.

Inflation and Monetary Policy. Turkey's principal economic problems remains inflation and public sector indebtedness. Annual consumer price inflation averaged around 80% in the 1990s and nearly 50% in 2000 through 2003 . Wholesale price inflation has been at comparable levels. In 2003, however, Turkey's Central Bank finally succeeded in controlling inflationary pressures: as of February 29, 2004 the previous 12-month increase in the CPI had fallen to 27.01%.

Turkey's current economic reform program has had two main goals--conquering the persistent high inflation of 1990s and the associated macroeconomic instability, and reducing public debt to sustainable levels. Following the 2000-01 crisis, which saw the collapse of the crawling peg under the previous International Monetary Fund (IMF) program, a new 3-year standby agreement was approved by the IMF in February 2002. It focused on combating inflation through a floating foreign exchange regime and tight monetary policy conducted by the newly independent Central Bank. The program also requires fiscal discipline leading to a 6.5% primary surplus target in 2003 and 2004 and continued structural reforms. The program began to show its results with lower inflation, resurgent growth and, at least, partial success in maintaining fiscal discipline. GDP growth reached 7.8% in 2002 and 5.8% in 2003, while the government final 2003 fiscal data are expected to come close to its full-year primary surplus target of 6.5% of GDP. The public debt-to-GNP (Net Public Debt to GNP) ratio, after shooting up to 92 in the crisis year of 2001, fell to 79.0% in 2002 and became 72.5% as of 2^nd quarter of 2003.

Principal Growth Sectors Energy. Installed energy generation capacity in Turkey reached 28,332.4 MW as of the end of 2001. Fossil fuels account for 59% of the total installed capacity (16,623 MW) and hydro, geothermal, and wind account for the remaining 41% (11,7093 MW). Total electricity consumption reached 126.9 billion kWh at the end of 2001. The growth in electricity generation has remained below electricity demand until recently, which made Turkey a net importer of electricity since 1997. The growth of energy demand slowed somewhat as a result of the 2001 economic crisis, but has picked up again. Turkish authorities expect a significant electricity shortfall by 2008 unless new facilities become operational. The Government of Turkey took some important steps in 2001 to liberalize its energy sector, including passage of the Electricity Market Law and establishment of the Energy Market Regulatory Authority (EMRA). However, the government has done little to follow through on plans to liberalize and privatize the electricity and natural gas sectors. In 2004, the High Planning Council approved the Electricity Sector Reform Strategy to renew the reform process.

Oil provides about 43% of Turkey’s total energy requirements; around 90% is imported. Domestic production is mostly from small fields in the southeast. New exploration is taking place in the eastern Black Sea. In 2004, the Parliament approved a petroleum market reform bill that will liberalize consumer prices and lead to the privatization of the state refining company TUPRAS. Turkey has a refining capacity of 719,275 barrels/day.

Turkey acts as an important link in the East-West Energy Corridor bringing the Caspian energy to Europe and world markets. The Baku-Tbilisi-Ceyhan pipeline to be begin operation in 2005 will deliver 1 million b/d of petroleum, and in 2006, the Shah Deniz pipeline will bring natural gas from Azerbaijan to Turkey. Turkey recently reached agreement with Greece to build an interconnector pipeline, an important step in bringing Caspian natural gas to Europe via Turkey.

Telecommunications. Parliament enacted legislation separating telecommunications policy and regulatory functions in January 2000, by establishing an independent regulatory body, the Telecommunication Authority. The Authority is responsible for issuing licenses, supervising operators, and taking necessary technical measures against violations of the rules. Most regulatory functions of the Transport Ministry were transferred to the Authority. The government also decided to give Turk Telekom commercial status and to end its monopoly in fixed telephone lines by December 2003. It changed this plan in May 2001 and announced full privatization of Turk Telekom, with the exception of a "golden share" for the government to protect security and public interest concerns. The new law allows up to 45% foreign ownership in Turk Telekom and allowing foreign ownership of a majority share is under consideration. Under the government’s privatization strategy for Turk Telekom, the Privatization Authority will issue a tender by May 31, 2004; however, problems relating to the privatization process are likely to prolong the process at least through the end of 2004.

Environment. With the establishment of the Environment Ministry in 1991, Turkey began to make significant progress addressing some of its most pressing environmental problems. The most dramatic improvements were significant reductions of air pollution in Istanbul and Ankara. However, progress on the remaining -- and serious -- environmental challenges facing Turkey have been slow.

In 2003, the Ministry of Environment was merged with the Forestry Ministry, reducing the influence of environmental officials in government decision-making. With its goal to join the EU, Turkey has made commendable progress in updating and modernizing its environmental legislation. However, environmental concerns are not adequately integrated into public decision-making and enforcement is lacking. Turkey faces a backlog of environmental problems, requiring enormous outlays for infrastructure. The most pressing needs are for water treatment plants, wastewater treatment facilities, solid waste management and conservation of biodiversity. On average, the environmental performance of private firms is much better than the large number of state owned enterprises.

Transport. The Turkish Government gives a special priority to major infrastructure projects, especially in the transport sector. The government is planning the construction of new airports, ports, and highways. The government will realize the majority of these projects by utilizing the build-operate-transfer (BOT) model.

Textiles. The textile sector is Turkey's largest manufacturing industry and its largest export sector. The removal of EU quotas on textile and apparel imports--part of the customs union--has improved growth prospects. The global phase-out of textile quotas in 2005 will provide increased opportunities, albeit with increased competition from other suppliers, in the U.S. and other markets. Other principal growth sectors are defense equipment, tourism infrastructure, building products, automobiles and automotive parts, and electronics.

FOREIGN RELATIONS
Turkey's primary political, economic, and security ties are with the West, although some voices call for a more "Eurasian" orientation. During the last several years, Turkey has continued to pursue its EU candidacy with the hope of getting a date in December 2004 for the beginning of accession negotiations.

Turkey entered NATO in 1952 and serves as the organization's vital eastern anchor, controlling the straits leading from the Black Sea to the Mediterranean and sharing a border with Syria, Iraq, and Iran. A NATO headquarters is located in Izmir. Besides its relationships with NATO and the EU, Turkey is a member of the OECD, the Council of Europe, and OSCE. Turkey also is a member of the UN and the Islamic Conference Organization (OIC). In December 1999, Turkey became a candidate for EU membership. In October 2004, the European Commission recommended that the European Council during its December 2004 meeting grant Turkey a date to begin formal accession talks.

Turkey and the EU formed a customs union beginning January 1, 1996. The agreement covers industrial and processed agricultural goods. Turkey is harmonizing its laws and regulations with EU standards. Turkey adopted the EU's Common External Tariff regime, effectively lowering Turkey's tariffs for third countries, including the United States.