ECONOMY

Erdemir selloff puts gov’t in the hot seat

ANKARA – A landmark tender to sell off Turkey’s national steel company Erdemir has become an uphill battle for the government, which faces growing opposition from local businesses and trade unions to potential foreign buyers, among them the world’s largest steelmakers. «Whoever pays the money will get Erdemir,» Prime Minister Recep Tayyip Erdogan declared recently in a blunt response to accusations that the government, keen to shore up its public finances and lure much-needed foreign investment, is betraying national interests. Ankara’s determination to divest Erdemir has sparked belligerent reactions. Angry workers have blocked representatives of foreign bidders from inspecting the factory, top company executives have resigned and die-hard opponents have asked the courts to halt the sale. Among the 13 companies that qualified to bid for Erdemir’s publicly held, dominant 49.29-percent share are Mittal, the world’s top steelmaker based in the Netherlands, the second-largest, the Luxembourg-based Arcelor, and other giants such as the Anglo-Dutch Corus and South Korea’s POSCO. Critics argue that Erdemir, Turkey’s biggest steel company and only flat steel producer, is a strategic asset which cannot be dispensed with, particularly at a time when it is profitable. Apart from its economic value, the company has an emotional significance. Built in 1960 in the Black Sea town of Eregli, it has become a symbol of Turkey’s painstaking efforts to industrialize. Throughout the decades, it has also steered social life in Eregli, funding infrastructure projects, building schools, organizing festivals and sponsoring sports clubs. «This is the government’s most difficult privatization project, because it amounts to privatizing not simply a company but a whole town,» said Emre Aksoy, an analyst at Eczacibasi Investment. «But the timing is good and the sale must happen.» Turkey is under pressure to speed up its often botched privatization efforts under a $10-billion standby deal with the International Monetary Fund that is aimed at consolidating a spectacular economic recovery after two severe crises in 1999 and 2001. Proponents see a unique opportunity to get a good price for Erdemir, estimated at about $2 billion, after the boom year of 2004 in the global steel industry, which saw Erdemir boost its production to 3.6 million tons and its profits to some $470 million. Twenty-three Turkish firms joined forces last month and submitted their own bid to buy the company. Ali Kibar, head of Kibar Holding which is leading the joint venture, explained that Erdemir is providing the main input for Turkey’s thriving automotive and home appliances industries, which are among the country’s major exporters. «Erdemir is a strategic manufacturer at least for these two sectors and its sale to a foreigner will pose a great risk,» he told AFP.