ECONOMY

Turkey gets IMF money but faces difficulties over major oil pipeline

ANKARA (Combined reports) – Foreign Minister Abdullah Gul admitted yesterday that problems over land expropriation and taxes in Turkey are holding up work on the construction of a major oil pipeline from Azerbaijan to Turkey’s Mediterranean coast. In an interview with the CNN-Turk channel, Gul confirmed that British oil multinational BP, the project operator of the planned Baku-Tbilisi-Ceyhan (BTC) pipeline, had complained to the Turkish government over the difficulties. «We have recently received such a letter. They have raised certain complaints… Some expropriation affairs, some financial affairs and tax issues are creating problems,» Gul said, without elaborating. He pledged that Ankara would clear out the snags in the shortest possible time. «We have taken an extraordinarily speedy action to overcome the problems. This project is very important for us and the prime minister [Recep Tayyip Erdogan] is personally following the matter,» Gul said. His comments came atop an announcement from Baku Saturday that a hoped-for loan from the European Bank for Reconstruction and Development to finance the Azeri section of the conduit has run into problems, apparently due to widespread concerns about the environmental impact of the project. The announcement was seen as a blow for the $2.9 billion pipeline project to export Caspian oil to the Mediterranean, which has already been dogged by criticism from environmental groups. The BTC pipeline, due for completion in 2005, will carry crude from Azerbaijan’s sector of the Caspian Sea via Georgia to a tanker terminal in the Turkish Mediterranean port of Ceyhan. It is backed by the United States and investors include BP, ConocoPhillips, Statoil, Unocal, Itochu, Inpex, TPAO, ENI Agip, Delta Hess and Azerbaijan’s state oil company SOCAR. If the loan announcement came as a blow to Turkey, the release of $701 million in loans by the International Monetary Fund (IMF) late on Friday, part of an $18 billion package promised in February, came as a relief. It was the first installment of the package sent since Erdogan took office last month. The IMF approved the overall package with the aim of improving economic conditions in Turkey. The Turkish government so far has drawn $14 billion. The IMF’s executive board approved the new loans after completing its latest review of Turkey’s economic performance. It was the first disbursement since the start of the US-led war in neighboring Iraq, for which Turkey refused to allow the United States to use its territory to mount an attack from the north. «The government’s strong commitments to stabilization and economic reform are welcome, and essential, given the economic challenges Turkey faces,» said Anne Krueger, acting chairwoman of the IMF executive board. Still, fallout from the war has added to the financial turmoil, she said. At the start of the conflict, Turkish interest rates rose to around 70 percent, raising the possibility that further market turmoil could force the country to default on its massive debt. Krueger said «recent policy slippages» also have contributed to the economic woes. She stressed fiscal restraint and changes in Turkish taxation policies as important goals for the government. New business also could be generated in postwar Iraq, an avenue for economic development that has not been available to Turkey for two decades, senior IMF officials said. (AFP, AP)