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Diplomacy in Action

Turkey (09/02)


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PROFILE

OFFICIAL NAME:
Republic of Turkey

Geography
Area: 766,640 sq. km. (296,000 sq. mi.).
Cities: Capital--Ankara (pop. 3.7 million). Other cities--Istanbul (9.2 million), Izmir (3.2 million), Bursa (1.9 million), Adana (1.7 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 (1999): 65.5 million.
Annual growth rate: 5%.
Ethnic groups: Turkish, Kurdish, other.
Religions: Muslim 98%, Christian, Bahai and Jewish.
Languages: Turkish (official), Kurdish, and Arabic.
Education: Years compulsory--12. Attendance--95%. Literacy--82%.
Health: Infant mortality rate--35.81/1,000. Life expectancy--73 yrs.
Work force (23 million): Agriculture--46%; industry and commerce--16%; services--38%.

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: Democratic Left Party (DSP), Nationalist Action Party (MHP), Motherland Party (ANAP), True Path Party (DYP), Contentment (Saadet) Party, Justice and Development (AK) Party. Suffrage: Universal, 18 and older.
National holiday: Republic Day, October 29.

Flag: flag of turkey

Economy
GNP: (2000) $201.9 billion; (2001) $148.2 billion.
Annual growth rate: (2000) (+) 6.1%; (2001) (-)9.4%.
GNP per capita: (2000) $2,986; (2001) $2,160.
Annual inflation rate (CPI, 2000): 39.0%; (2001) 68.5%; (May 2002) 46.2%.
Natural resources: Coal, chromium, mercury, copper, boron, oil, gold. Agriculture (13.1% of GNP): Major cash crops--cotton, sugarbeets, hazelnuts, wheat, barley, and tobacco. Provides more than 47% of jobs, 12% of exports.
Industry (28.8%of GNP): Major growth sector, types--automative, electronics, food processing, textiles, basic metals, chemicals, and petrochemicals.
Trade: Exports (merchandise, 2000)--$27.3 billion; (2001) $31.2 billion. Imports (merchandise, 2001)--$40.5 billion: textiles and apparel, iron and steel, electronics, tobacco, and motor vehicles; (2000) $30.5 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 98% of the population is Muslim. Most Turkish Muslims belong to the Sunni branch of Islam, but a significant number are Alevi Muslims. The appeal of political Islam and the 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. Turks of Kurdish origin constitute an ethnic and linguistic group. Estimates of their population range up to 12 million.

HISTORY
The legendary Mustafa Kemal, a Turkish World War I hero later known as "Ataturk" or "father of the Turks," founded the Republic of Turkey in 1923 after the collapse of the 600-year-old Ottoman Empire. 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 nationalism impelled several ethnic groups to seek 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 who rallied under Ataturk's leadership. The nationalists expelled invading Greek forces from Anatolia after a bitter war. The temporal and religious ruling institutions of the old empire (the sultanate and caliphate) were abolished.

The new republic concentrated on Westernizing the empire's Turkish core--Anatolia and a small part of Thrace. Social, political, linguistic, and economic reforms and attitudes introduced by Ataturk before his death in 1938 continue to form the ideological base of modern Turkey. Referred to as "Kemalism," it comprises secularism, nationalism, and modernization and turns toward the West for inspiration and support. The continued validity and applicability of Kemalism are the subject of frequent discussion and debate in Turkey's political life.

Turkey entered World War II on the Allied side 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 provides for a democratic, secular, parliamentary form of government with a strong presidency and an independent judiciary. Internationally recognized human rights, including freedom of thought, expression, assembly, and travel, are protected but can be limited in times of emergency and cannot be used to violate 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. Labor rights, including the right to strike, are recognized in the Constitution but can be restricted. 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 require a two-thirds majority for approval. They also may be submitted to popular referendum.

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 April 1999, the Democratic Left Party (DSP) led by Bulent Ecevit captured 22% of the vote, followed closely by the far right Nationalist Movement Party (MHP) led by Devlet Bahceli which garnered 18%. Together with center-right Motherland Party (ANAP) of Mesut Yilmaz, the three parties forged a coalition with a strong majority of approximately 360 of the 550 seats in Parliament. This coalition, Turkey's 57th government, won a vote of confidence in Parliament in June 1999 and has been in power since then. Bolstered by its strong parliamentary majority, the 57th government embarked on an ambitious reform program that contained legislative proposals that had been attempted by several previous governments but had never succeeded. In the period 1999-2002, the government has succeeded in passing Constitutional amendments to strengthen individual human rights; legislative reforms to implement the Constitutional changes; economic reform legislation to reform the banking sector, social security system and procedures relating to foreign investment; and measures designed to enhance Turkey's role in regional security, including assuming control of the International Stability Assistance Force in Afghanistan in June 2002.

Principal Government Officials
President of the Republic--Ahmet Necdet Sezer
Prime Minister--Bulent Ecevit
Minister of Foreign Affairs--Sukru Sina Gurel
Ambassador to the United States--Faruk Logoglu
Ambassador to the United Nations--Umit Pamir

Turkey maintains an embassy in the United States at 2525 Massachusetts Avenue NW, Washington, DC 20008, tel. (202) 612-6700. Consulates general in Chicago (360 N. Michigan Ave., Suite 1405, Chicago, IL 60601, tel: 312-263-0644, ext. 28); Los Angeles (4801 Wilshire Blvd., Suite 310, Los Angeles, CA 90010, tel: 323-937-0118); New York (821 United Nations Plaza, New York, NY 10017, tel: 212-949-0160); and Houston (1990 Post Oak Blvd., Suite 1300, Houston, TX 77056, tel: 713-622-5849). The Permanent Representative of Turkey to the United Nations is located on 821 United Nations Plaza, 10th flr., New York, NY 10017, tel: 212-949-0150.

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 through the mid-1990s, with the exception of a sharp recession and financial crisis in 1994. However, Turkey's failure to complete this reform effort, combined with large and growing public sector deficits, resulted in high inflation, increasing macroeconomic volatility, and a weak banking sector.

The Ecevit government, in place since June 1999, 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 9.4% 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 through the end of 2001. In early 2002, the reforms began to show results, as inflation and interest rates fell significantly, the currency stabilized, and confidence began to return. Nonetheless, the economy remains very weak, and continued implementation of reforms is essential to restore 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 $15.2 billion as of March 2002, 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 through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. The Turkish privatization board continues to evaluate a series of significant privatizations including telecommunications, iron and steel, and other sectors with state ownership. After the 2001 February economic crisis, four state-owned banks underwent significant restructuring. Two banks were merged, and Ziraat Bank and Halk Bank, (Emlak Bank was merged under Halk Bank) are under commitment to the government for the ongoing economic program. The privatization process has been initiated for another state-owned bank, Vakifbank Bank.

Inflation and Monetary Policy. Turkey's principal economic problem remains inflation. Annual consumer price inflation has averaged 79% since prices began to escalate in 1988. Wholesale price inflation has averaged 75% over the same period. Annual CPI inflation was 68.8% in 1999 and 39.0% in 2000. Before the IMF program, the government regulated prices of some consumer goods, including bread, sugar, tea, and public utilities, to control the impact of inflation on low-income households. These regulations were gradually phased out.

Turkey's current economic reform program has had two main goals--conquering the persistent high inflation of 1990s and overcoming the associated macroeconomic instability. The original 3-year December 1999 standby agreement was signed by the IMF. It focused on combating inflation through a pegged foreign exchange regime. This was interrupted by two consequent financial crises, first in November 2000, and then in February 2002. The standby agreement signed by the IMF on January 18, 2001 aimed at achieving a sustained noninflationary growth. The program began to show its results with 0.6% month-on-month CPI inflation rate in May 2002, and TL8.9 quadrillion ($6 billion) primary budget surplus January-May 2002. The new economic program focuses on inflation targeting under a floating exchange regime. The Central Bank wants to direct the monetary policy to achieve the 35% year-end inflation target in 2002. In May 2001 the first major step was taken toward inflation targeting by granting the Turkish Central Bank full operational independence to pursue price stability. The Central Bank aims to maintain the floating exchange rate regime which was introduced after the February 2001 financial crisis.

Principal Growth Sectors Energy. Installed energy generation capacity in Turkey reached 27,264 MW as of the end of 2000. Fossil fuels account for 59% of the total installed capacity (16,053 MW) and hydro, geotherma,l and wind accounts for the remaining 41% (11,211 MW). Total electricity consumption peaked in 2000, reaching 128.3 billion kWh. The government expects annual electricity consumption to reach 287 billion kWh in 2010 and 567 billion kWh in 2020. The growth in electricity generation has remained below electricity demand until recently, which made Turkey a net importer of electricity since 1997. In 2000, Turkey imported 3.8 billion kWh electricity and exported 0.4 billion kWh. In 2001, the supply and demand for electricity were quite evenly balanced, with a small excess capacity, due to the economic crisis in Turkey which also hit electricity demand. These balances are expected to change radically in 2002, with the two gas fired power plants with 2,310 MW capacity entering operation.

The Government of Turkey has taken major steps to liberalize its energy sector since March 2001, when the Electricity Market Law entered into effect. The government appointed members to the Energy Market Regulatory Authority (EMRA) in November 2001. EMRA will be responsible for regulating the electricity market, which will function on the basis of a pool system with multiple buyers and suppliers of electricity. The government aims to bring high-quality, low-cost and sustainable electricity to Turkey with the liberal market. EMRA foresees operation of the electricity market as of September 2002 and the natural gas market as of November 2002, but has the authority to extend these deadlines for another 6 months.

Telecommunications. The telecommunications sector in Turkey has grown substantially in recent years, with an increase in its share in GDP from 1.03% in 1985 to 3.82% in 1999. The penetration of fixed telephone lines increased from 4.5% in 1985 to 27.4% in 1999. The penetration of mobile lines reached 28.7% in 2001. There is one fixed-line telephone operator (Turk Telekom) and four GSM mobile phone operators in the market.

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. The government is expected to announce a new privatization model for Turk Telekom by November 2002.

Environment. With the establishment of a Ministry of Environment in 1991, environmental issues have taken on increased prominence. New regulations regarding sewage, medical waste, and power plant emissions will add growth to this sector. All new plants, as a part of their approval process, must submit an environmental impact assessment to the Ministry of the Environment and obtain approval before starting construction. Municipal governments nationwide also are implementing environmental projects to better handle sewage and solid waste.

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. During the last several years, Turkey has continued to expand its relations with western Europe, as a member of the Council of Europe, European Court of Human Rights, and candidate for EU membership.

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.

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.

Turkey is a member of the World Trade Organization (WTO). It has signed free trade agreements with the European Free Trade Association (EFTA), Israel, and many other countries. In 1992 Turkey and 10 other regional nations formed the Black Sea Economic Cooperation Council to expand regional trade and economic cooperation.

U.S.-TURKEY RELATIONS
U.S.-Turkish friendship dates to the late 18th century and was officially sealed by a treaty in 1830. The present close relationship began with the agreement of July 12, 1947, which implemented the Truman Doctrine. As part of the cooperative effort to further Turkish economic and military self-reliance, the United States has loaned and granted Turkey more than $4 billion in economic aid and more than $14 billion in military assistance.

U.S.-Turkish relations focus on areas such as strategic energy cooperation, trade and investment, security ties, regional stability; and human rights progress.

The U.S. and Turkey have had a Joint Economic Commission and a Trade and Investment Framework Agreement for several years. In 2002, the two countries indicated their joint intent to upgrade bilateral economic relations by launching an Economic Partnership Commission. Turkey has been designated a Big Emerging Market (BEM) for U.S. exports and investment by the Department of Commerce. In 2001, the U.S.-Turkey trade balance was almost even, with each country exporting approximately $3 billion to the other. The United States is Turkey's third-largest export market.

Principal U.S. Officials
Ambassador--W. Robert Pearson
Deputy Chief of Mission--Robert S. Deutsch

Counselors
Political Affairs--John W. Kunstadter
Political-Military Affairs--Stuart V. Brown
Economic Affairs--Scot Marciel
Regional Affairs--Daniel Sheehan
Consular Affairs--Laura Dogu
Administrative Affairs--Kevin C. Milas
Public Affairs--Francis B. Ward
Agricultural Affairs--James Higgiston
Commercial Affairs--Amer Kayani
Defense/Air Attache--Col. Dennis Danielson
Navy Attache--Capt. Devon Goldsmith
Army Attache--Col. Martin Rollinson

Consul General Istanbul--David Arnett
Consul Adana--Greta Holtz
Consul APP Izmir--Scott Edelman

The U.S. embassy is located at 110 Ataturk Blvd., Ankara, tel: (90) (312) 455-5555. The Consulate General in Istanbul is at 104-108 Mesrutiyet Caddesi, tel: (90) (212) 251-3602; the Consular Agent in Izmir at Kazim Dirik Caddesi, Atabay Is Merkezi 13/805, tel: (90) (232) 441-2203; and the Consulate in Adana, on Ataturk Caddesi, tel: (90) (322) 459-1551.



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