TURKPULSE No: 39 ..................... MAY 29th, 2001
Turkish businessmen are making big investments abroad, especially in the
former Warsaw Pact countries, at a time when Turkey needs substantial external
financing to put its troubled economy in order.
Turkish investments in the Balkans come first
Bulgaria leads the list of these countries that have been attracting Turkish capital. Koc has recently inaugurated a Ram supermarket in Sofia among scores of other Turkish investments in that country. According to the agreement reached between the two countries, Bulgaria hands to Turkish companies highway and energy installation investment projects. At the moment $600 million such contracts are being run in Bulgaria by Turkish companies. Bulgaria will repay with $1.5 billion electricity exports to Turkey within the next 10 years. Ceylan Holding used to run these highway projects in Bulgaria, but because it fell into financial straights there have recently appeared some problems in reorganising these investments. Even so Bulgaria constitutes one of the main targets of Turkish companies for investments abroad.
Also, the hundreds of thousands of Bulgarian Turks who had been forced to migrate into Turkey during the communist regime are now returning home en masse. This is mostly because the European Union has accorded Bulgaria free movement of its citizens in Europe, while Turks have no such facility, despite the customs union, which has been working smoothly since January 1st, 1996 between Turkey and the EU. These Turks in Bulgaria and in the Balkans in general constitute a bridge for Turkish investments there, as well as cooperation in all fields.
Investments in Romania passed through some difficult days during the outbreak of the two financial crises in Turkey, last November and February. Kamuran Cortuk`s Bayindir Holding met with financial problems when the Romanians rushed to Bayindir Bank in Bucharest to withdraw their money. As Bayindir Holding was channelling Turkish investments and business to that country these upheavals naturally hampered Turkish business there, but with $60 million cash sent there from Turkey the crisis was eventually overcome at least partially and conditions are normalising in that country.
Poland, Hungary and the Czech Republic, the former communist countries that lead the list of candidates for accession to the EU, are the main targets of the Turkish capital of late because labour is reasonably cheap, every investment incentive and tax exemptions are accorded to foreign capital and Turkish businessmen reckon that these investments will be good outlets for their exports to Europe and the world when they enter the Union before long.
Turkey and Russia have become indispensable partners, says Minister
The Russian Federation and the newly independent Turkic republics are other centres of attraction for Turkish investments although business relations in those countries are a bit different. Rather than cash investment in Russia, Turks invest mostly in services. In other words, Enka and some other big Turkish contracting companies and holdings have built big office blocks in Moscow, mostly in cooperation with Moscow Municipality and instead of getting money for these services they own a part of the buildings and rent out these western standard offices mostly to American and foreign companies to earn a lot of money. The number of Ram stores is also mushrooming rapidly throughout these countries.
The State Minister in charge of foreign investments in Turkey, Yuksel Yalova, attended a seminar in Moscow last week to discuss economic cooperation with the Russian Federation. He said at the seminar on Tuesday (22nd) that Turkey and the Russian Federation only had $400 million mutual trade ten years ago, but have now increased that sum to $4.5 billion and become one another’s indispensable partners in the economy and mutual relations. Considering the potential of the two countries, this level was not adequate and this cooperation promised to grow much bigger, he said.
Retail marketing, banking, food industries and real estate business being the main sectors, Turkish investments in Russia had surpassed $500 million. They were growing bigger and expanding towards other sectors, as evidenced by the Turkish nation’s trust and confidence in the bright future of the Russian economy, he stressed.
According to the information Yalova gave at the seminar, this cooperation is carried out by Turkish private enterprise on the foundations of the “multilateral relations that exist between our two countries”.
Energy is the backbone of economic cooperation with Russia
Last Tuesday (22nd) Deputy PM Mesut Yilmaz explained once again Turkey’s future energy strategy when he and the former Energy Minister, Cumhur Ersumer, came under fire in Parliament over the Blue Stream project and the natural gas pipelines network that is being built in Turkey with ANAP leaders as the locomotive of this ambitious and very vital project for Turkey.
Yilmaz dismissed the claims that he had sacrificed the Turkmen gas by signing the Blue Stream agreement with Russia. The two were not alternatives, but supplementary to one another. They were ready to buy Turkmen gas, but the pipeline to Turkey was non-existent and nowhere in sight.
Turkey is currently receiving 12 billion m3 natural gas from Russia via a pipeline through Ukraine, Romania and Bulgaria and it will increase to 14 billion m3 next year. The Blue Stream pipeline under the Black Sea will hopefully start test operations in January or February 2002. The pipes for this line have already arrived in Samsun and are being welded together at the moment. The Italian contracting company, ENI, will start laying the pipes under the Black Sea on July 26th to be completed with only a few months delay on the scheduled time of September 2001. When completed, 16 billion m3 a year will eventually be carried to Turkey, which means a total of 30 billion m3/year gas imports from Russia and it will make Turkey the second biggest importer of Russian gas after Germany. But Turkey needs 50 billion m3 gas a year as from the year 2010. There was disagreement on this topic at one point between the Energy Ministry attached to ANAP that put this figure at 54 billion m3 and the SPO (The State Planning Organisation) that comes under the MHP, which used to find this figure too much. But this discrepancy has also been eliminated now and they both agreed that Turkey would need 50 billion m3 natural gas a year in 2010.
According to Mesut Yilmaz, 6 bn m3 will come from Iran. The remaining 14 billion m3 could well be imported from Turkmenistan, but President Turkmenbasi demanded $2 billion advance payment for this deal. Even though he has now reduced it to $500 million it means $3 billion financing including the $2.5 billion investment for the Trans-Caspian pipeline construction. There is simply no one in the world today to raise that financing. Furthermore, there are problems about the legal status of the Caspian. That is why the Trans-Caspian pipeline is still a dream and Turkey now looks, for its long-term gas requirements, to Iraq and Azerbaijan’s new gas discovery in the Shah Sea of the Caspian. Meanwhile, 30 billion cubic meters from Russia, six billion from Iran and LNG (liquid natural gas) from Algeria will be enough for Turkey until it completes other energy investments within the next nine years.
ANAP is weaving Turkey with a network of pipelines that have already reached Dogu Beyazit, Agri, Erzurum, Sivas, Kayseri, Kirikkale and Konya. The natural gas line between Izmir and Karacabey has also been completed. By the end of this year, this natural gas pipeline network will cover 60% of Turkey, affirms Yilmaz. (Issue No:90 of February 15th, 1999 – Turkey Being Woven With Natural Gas Pipelines)