Azerbaijan, BP step closer to gas pipe to Turkey
BAKU, Feb 21 (Reuters) - A BP-led group signed on Thursday four key agreements with Azerbaijan to move one step closer to a deal to build a pipeline from the giant Azeri offshore Shakh Deniz gas field on the Caspian Sea to Turkey.

"This event will boost the pipeline project which will deliver gas from Azerbaijan to Turkey and in future to other markets," said the head of BP-Azerbaijan, David Woodward.

The sides signed four deals: two on mutual obligations and guarantees between Azerbaijan and the shareholders of Shakh Deniz, a memorandum on the marketing of Azeri gas on international markets and a pipeline agreement.

Woodward said the group planned to launch the first phase of the project, including the construction of a gas production platform on the field and a pipeline running from the field via Azerbaijan and Georgia to Turkey, by June-July 2002.

The first phase would cost $2.6 billion and envisages annual output of about eight billion cubic meters from Shakh Deniz.

The 1,050 km (655 miles) pipeline is to be built by 2005 and will have total annual capacity of 22 billion cubic metres.

BP and Statoil each hold 25.5 percent in Shakh Deniz, estimated to hold one trillion cubic metres of gas.

Azeri state oil company, Russia's LUKOIL French TotalFinaElf and Iran's OIEC each own 10 percent in the project while Turkish TPAO holds the remaining nine percent.

Azerbaijan last year signed a deal to supply Turkey with 2.0 billion cubic metres (bcm) of gas in 2004, rising to 3.0 bcm in 2005, 5.0 bcm in 2006 and 6.6 bcm per year in 2007-18.

Turkey currently buys 16 bcm of gas a year from Russia and several billion cubic meters from Iran. Russian volumes are to rise to some 30 bcm a year, but Turkey has said demand for gas imports might rise to some 80-100 bcm in the next 10 years.

U.S. oil majors deny Balkan pipeline interest
NEW YORK, Feb 21 (Reuters) - U.S. oil majors Exxon Mobil and Chevron Texaco have denied claims that they are considering building a trans-Balkan pipeline to ship oil westward from the Caspian and the Black Seas.

The head of Albanian, Macedonian and Bulgarian Oil Corp. (AMBO), which manages the project, said last week the two majors are in regular discussions on the project, which envisions carrying 750,000 barrels a day of landlocked Caspian oil from Bulgaria to Albania via Macedonia.

An Exxon Mobil spokeswoman said the notion that the company might get involved in building the line was "very, very premature," adding, "There have been some discussions but they have been very preliminary."

"We always keep up to date on pipeline projects as they develop, but we have no current plans to fund any projects in that region," said a spokesman for ChevronTexaco.

The AMBO project, which has been on the drawing board since 1996, aims to bring growing oil supplies from Caspian states such as Azerbaijan and Kazakhstan, bypassing the heavily used Bosphorus Straits through Turkey.

U.S. urges Turkey to resolve business disputes
Claudia Parsons, ANKARA, Feb 27 (Reuters) - A senior U.S. official said on Wednesday that business disputes involving companies that have invested in Turkey were damaging the climate for investment in the crisis-struck developing economy there.

Alan Larson, the U.S. State Department undersecretary for economic, business and agricultural affairs, said he had discussed with Turkish government officials how to boost foreign investment in Turkey, seen as vital to future growth.

Larson declined to say whether he had discussed a $3 billion fraud lawsuit brought against the owners of Turkish mobile phone company Telsim by Motorola Inc and Nokia of Finland.

"We discussed the importance of resolving some of the ongoing disputes that have created some difficulties in the investment climate," Larson told reporters after two days of talks in Ankara aimed at boosting economic ties.

"There are a range of them (disputes), some of them involving firms in the electrical power area, in agriculture, in the food and beverage area," he said.

"I think the single most important thing is that the government listens very carefully to the concerns of investors."

Pressed on whether the Telsim-Motorola case had come up, he said: "We discussed an extensive list of business disputes, not in the spirit of raising contentious issues but in the spirit of identifying the sorts of problems that if they could be solved would help build up Turkey's reputation as a very good place in which to do business."

Bureaucracy, corruption and lack of transparency are blamed for keeping foreign investors away from Turkey, which attracted just $900 million of foreign direct investment in 2000.

Larson was visiting Turkey with a delegation of U.S. economic officials for talks aimed at boosting trade, which amounted to over $3 billion in each direction in 2001, and other ties.

Turkey's strategic importance as the only predominantly Muslim member of NATO has risen since the September 11 attacks and the U.S. response.

Ankara, still recovering from a devastating financial crisis which struck last February, has been among the most vocal supporters of Washington's self-declared "war on terrorism".

For its part, Washington has been a key advocate of more than $30 billion of loans from the International Monetary Fund and World Bank to help Turkey overcome its financial crisis.

"We're very much aware of the importance of exports to Turkish economic growth and in particular of textiles," Larson said, announcing a move to extend preferential status for certain Turkish exports to include hand-knitted carpets and handicraft textiles.

"This will requre legislative action in the United States but we are confident of our ability to move forward," he said.

The two sides also agreed to move forward on creating Qualified Industrial Zones (QIZ) whereby Turkey would be able to export certain products duty free to the United States.

"This is an initiative that we think could create high paying jobs in Turkey and promote both investment in Turkey and exports from Turkey to the United States," he said.

No progress was made on the possibility of Washington writing off part or all of the $5 billion of military debt owed by Ankara. Larson said discussions were continuing on what he called a very complex issue.

Turkey sees $10 billion tourism revenue in 2002
ISTANBUL, Feb 27 (Reuters) - Turkey expects to attract 13-14 million foreign visitors in 2002, bringing in crucial hard currency earnings of $10 billion or more, Tourism Minister Mustafa Tasar said on Wednesday.

According to official statistics, 11.6 million visitors came to Turkey in 2001. Global turmoil after the September 11 attacks hit arrivals in the latter part of the year. "We expect around 13-14 million tourists and I want to state that we also expect income of $10 billion or more in 2002," Tasar told reporters in Istanbul.

Revenues from tourism totalled $7.82 billion in the first 11 months of 2001, according to government data.

Tasar said only a possible U.S. attack on Iraq could hit revenue targets for next year. "Apart from a (U.S.) intervention in Iraq there are no winds that can affect us. We are making every kind of initiative to ensure there will be no intervention in Iraq," Tasar said.

Washington does not rule out a military operation in Iraq if President Saddam Hussein fails to obey U.N. resolutions and allow in U.N. weapons inspectors.

Ankara opposes a U.S. attack, saying war in Iraq could derail its $16 billion three-year standby accord with the IMF.

Turkey floated its lira currency in early 2001 and it has since lost around half its value against the dollar, making the country a cheaper destination for visitors, mainly from Britain and Germany.

Toyota's Turkey unit begins exporting Corolla cars
TOKYO, Feb. 19 (Kyodo News Service) - Toyota Motor Corp. said Tuesday its Turkey production subsidiary Toyota Motor Manufacturing Turkey Inc. (TMMT) has begun exporting TMMT-made Corolla cars.

TMMT, which has been producing Corollas since 1994, expects to export 40,000 Corolla sedans and station wagons annually to 22 countries, mainly in Europe, Toyota said. With its new role as a producer and an exporter, TMMT joins the ranks of Toyota Motor Manufacturing (UK) Ltd. and Toyota Motor Manufacturing France S.A.S. as a strategic manufacturing center for Toyota in Europe, the biggest Japanese automaker said.

Turkey's year of crisis
Is this another false dawn for Turkey?
James Arnold, BBC News Online-A currency devaluation, says one investment banker "is like giving electro-shock therapy to a corpse. "The patient jumps around a bit, but at the end of the day, he's still dead." Exactly a year ago, in the teeth of its worst financial crisis since World War II, Turkey devalued its currency, the lira. Since then, the Turkish economy has leapt about a fair bit, and in recent months has even shown encouraging signs of life. But is this a real revival - or just another painful spasm? Green shoots

Devaluations usually give an economy a shot in the arm, because they make exports cheaper, reduce the burden of domestic debt, and encourage foreign firms to invest. Turkey suffered a tumultuous few months after its February 2001 devaluation, but now seems to be reaping a few of those benefits. The lira, which plunged a year ago, has stabilised, and even regained some of its lost ground. The stock market has risen 20% since the middle of last year - at a time when the rest of the world's bourses have plunged. After shrinking by a catastrophic 8% last year, Turkish economic output is predicted to grow by 3% this year, and inflation should be a moderate - by Turkish standards - 35%. On Wednesday, the mood of modest cheer persuaded the Turkish Central Bank to cut its main interest rate by two full percentage points - although it is still an eye-popping 57%. And in a sign that foreign firms are interested in devaluation bargains, Cadbury Schweppes on Thursday announced it was paying £67m for Kent, Turkey's biggest confectionery firm.

American friends
These green shoots have a lot to do with last year's devaluation. But they have just as much to do with post-11 September geopolitics. Turkey's willing assistance in the War on Terror has made it a lot of influential friends: the US, which has been at times lukewarm in its attitude to Turkey, has become positively amorous. On 4 February, Turkey won a $16bn stand-by credit from the International Monetary Fund (IMF) - thereby incidentally becoming the Fund's biggest borrower. Given the truculent attitude of the IMF before 11 September, many see the hand of Washington behind the new loan. "Turkey would probably have got that cash anyway," says Merli Baroudi, deputy director of country analysis at the Economist Intelligence Unit. "But without 11 September, it may not have been as quick, and it may not have been as much money."

Miles to go
So with American patronage and the devaluation dividend, is Turkey out of the woods? Probably not: the immediate future is still fraught with risks. First, the current government, a ramshackle coalition of three nationalist and left-of-centre parties, looks far from robust. Prime Minister Bulent Ecevit is respected and a canny operator, but at 76years old, he is notoriously frail - even at times absent-minded. Even after various bouts of blood-letting last year, the coalition parties still have so little in common that it is hard to imagine them surviving long in Mr Ecevit's absence. If the government fell, polls indicate that none of the three parties would be able to command even the 5% support necessary to get into parliament, let alone to form another government.

Nasty neighbours
This threat could be enough to hold the coalition together. But that is to overlook the second main risk factor: the possibility of a US military campaign against Iraq, one of Turkey's eastern neighbours. Turkish support for war in Afghanistan has been hard enough to hold together at home; an escalation against an Arab neighbour could see tensions reach boiling point - not to mention the impact on the Kurdish population, mainly settled around the Turkish-Iraqi border. A heavy influx of refugees would weigh heavily on the public purse, already considerably overstretched after bearing the cost of last year's economic reforms.

Balancing act
Third, potential horrors lurk in the banking sector, run ragged by decades of reckless lending and insufficient supervision. Last year, the Turkish government did sterling work cleaning up the balance sheets of state-run banks - the costs of which forced the government to go cap in hand to the IMF. But the state sector accounts for only around one-fifth of the total Turkish banking industry, and no one knows quite how bad the private sector could prove to be. On Wednesday, the government finally got around to publishing a tentative timetable for boosting capital in the banking sector. Bank owners are to consult with the authorities now over how they plan to increase capital, something that should be complete by the end of June. Banks that cannot reach target levels can then apply for state support, a process that is already being estimated to cost $4bn.

Lira losers
Everyday life and business, meanwhile, have barely improved. Hundreds of thousands of Turks have lost their jobs since the crisis hit. Those lucky enough to be still in work have seen the dollar value of their savings and incomes halve, while their financial obligations - usually set in hard currency - ballooned. And while the government has made helpful noises about loosening up the notoriously bureaucratic business climate, investors complain that almost nothing has been done. The big business story in the past few weeks has been a bizarre and bitter row between Uzan family, which owns number two Turkish mobile phone firm Telsim, and cellular giants Nokia and Motorola. The multinationals, which are suing Telsim for fraud, say the Uzan family misused some $2.7bn of their money. Selling a couple of chocolate factories to Cadbury can't quite take away the bitter taste.

Turkish jobless rate surges after crisis
Number of jobless rose by 70.9 % year-on-year
Feb 19 (Reuters) - Unemploy-ment in Turkey in the fourth quarter of last year rose to 10.6 percent from 6.3 percent in the fourth quarter of 2000, the State Statistics Institute said on Tuesday.

Turkey was hit by a devastating financial crisis that started towards the end of 2000 and eventually led to the collapse of a previous IMF economic program and the flotation of the lira in February 2001.

The economy is expected to have contracted by some 8.5 percent last year as Turkey struggled to repair the damage of the crisis with the help of new loans and a new economic program from the International Monetary Fund.

According to a survey of households, there were a total of 19.742 million people employed and 2.335 million unemployed among the working population in the fourth quarter of 2001.

The number of jobless rose by 70.9 percent year-on-year, with 969,000 more people out of work.

The State Statistics Institute said the unemployment rate in urban areas was 13.2 percent and in rural areas seven percent.