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Diplomacy in Action

Turkey (10/03)


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PROFILE

OFFICIAL NAME:
Republic of Turkey

Geography
Area: 780,580 sq. km.
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 (2003): 68.1 million.
Annual growth rate: 7.8%.
Ethnic groups: Turkish, Kurdish, other.
Religions: Muslim 98%, Christian, Bahai and Jewish.
Languages: Turkish (official), Kurdish, Arabic, Armenian, Greek.
Education: Years compulsory--. Attendance--95%. Literacy--86.5%.
Health: Infant mortality rate--39.4/1,000. Life expectancy68.5 yrs.
Work force (23 million): agriculture--35.6%; industry--17.5%; services--42.2%.

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:, Justice and Development Party (AK), Republican People's Party (CHP), and True Path Party (DYP). Suffrage: Universal, 18 and older.
National holiday: Republic Day, October 29.

Flag: flag of turkey

Economy
GDP: (2001) $144.4 billion; (2002) $181.8 billion.
Annual real GDP growth rate: (2001) (-) 9.5%; (2002) (+)7.8%.
GNP per capita: (2001) $2,107; (2002) $2,611.
Annual inflation rate (CPI, 2001): 68.5%; (2002) 29.7%.
Natural resources: Coal, chromium, mercury, copper, boron, oil, gold.
Agriculture (11.5% of GNP): Major cash crops--cotton, sugar beets, hazelnuts, wheat, barley, and tobacco. Provides more than 40% of jobs, 6% of exports.
Industry (28.8% of GNP): Major growth sector, types--automative, electronics, food processing, textiles, basic metals, chemicals, and petrochemicals.
Trade: Exports (merchandise, 2001)--$31.3 billion; (2002) $35.1 billion. Imports (merchandise, 2001)--$48.5 billion: textiles and apparel, iron and steel, electronics, tobacco, and motor vehicles; (2001) $39.5 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
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. The current ruling party comes from a tradition that challenges many of the Kemalist precepts and is driven in its reform efforts by a desire to achieve EU accession.

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 proclaims Turkey's system of government as democratic, secular, and parliamentary.The presidency's powers are not precisely defined in practice, and the president's influence depends on his personality and political weight. The judiciary is declared to be independent. 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 what the Constitution considers 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 the November 2002 election of Turkey's 58th government, the Justice and Development Party (AK) captured 34.3% of the total votes, making Abdullah Gul Prime Minister, followed by the Republican Peoples Party (CHP) with 19.39% of the vote, led by Deniz Baykal. A special General Election was held again in the province of Siirt on March 9, 2003, resulting in the election of AK's chairman Recep Tayyip Erdogan to a seat in parliament, allowing him to become prime minister on March 13. AK and CHP were the only parties to surpass the 10% threshold required to hold seats in parliament. The elections resulted in 363 of the 550 seats going to AK, 178 seats to CHP, and 9 as independent. Due to a reshuffle in party affiliation, AK holds 367 seats, CHP holds 175 seats, five are independent, and three joined the True Path Parth (DYP).

Principal Government Officials
President of the Republic--Ahmet Necdet Sezer
Prime Minister--Recep Tayip Erdogan
Minister of Foreign Affairs--Abdullah Gul
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 floor, 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, but growth that has been punctuated by sharp recessions and financial crises in 1994, 1999, and 2001. Turkey's failure to pursue additional reforms, combined with large and growing public sector deficits, resulted in high inflation, increasing macroeconomic volatility, and a weak banking sector.

The Ecevit government, in power from 1999 through 2002, 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 9.5% 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. In 2002 and 2003, the reforms began to show results. With the exception of a period of market jitters in the run-up to the Iraq war, inflation and interest rates have fallen significantly, the currency has stabilized, and confidence has begun to return. Nonetheless, the economy remains very fragile, and continued implementation of reforms is essential to sustain 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 $15.7 billion as of November 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 and has taken steps to improve its investment climate through administrative streamlining, an end to foreign investment screening, and strengthened intellectual property legislation. However, a number of disputes involving foreign investors in Turkey and certain policies, such as high taxation of cola products and continuing gaps in the intellectual property regime, inhibit investment. The Turkish privatization board is in the process of privatizing a series of state-owned companies, including the state alcohol and tobacco company and the oil refining parastatal. In 2004, the Privatization Board is scheduled to privatize the telephone company and some of the state-owned banks. The government also has committed in the World Trade Organization to liberalize the telecommunications sector at the beginning of 2004.

Inflation and Monetary Policy. Turkey's principal economic problems remains inflation and public sector indebtedness. Annual consumer price inflation averaged around 80% in the 1990s and nearly 50% in 2000 through 2002. Wholesale price inflation has been at comparable levels. In 2003, however, there are signs that Turkey's Central Bank is finally succeeding in controlling inflationary pressures: as of September 30, 2003, the previous 12-month increase in the CPI had fallen to 23%.

Turkey's current economic reform program has had two main goals--conquering the persistent high inflation of 1990s and the associated macroeconomic instability, and reducing public debt to sustainable levels. Following the 2000-01 crisis, which saw the collapse of the crawling peg under the previous International Monetary Fund (IMF) program, a new 3-year standby agreement was approved by the IMF in February 2002. It focused on combating inflation through a floating foreign exchange regime and tight monetary policy conducted by the newly independent Central Bank. The program also requires fiscal discipline leading to a 6.5% primary surplus target in 2003 and continued structural reforms. The program began to show its results with lower inflation, resurgent growth and, at least, partial success in maintaining fiscal discipline. GDP growth reached 7.8% in 2002 and is likely to reach 5% in 2003, while the government is likely to, at least, come close to its full-year primary surplus target of 6.5% of GDP. The public debt-to-GNP ratio, after shooting up to 95% in the crisis year of 2001, fell to 79.8% in 2002 and is expected to fall further by year-end 2003.

Principal Growth Sectors Energy. Installed energy generation capacity in Turkey reached 28,332.4 MW as of the end of 2001. Fossil fuels account for 59% of the total installed capacity (16,623 MW) and hydro, geothermal, and wind account for the remaining 41% (11,7093 MW). Total electricity consumption reached 126.9 billion kWh at the end of 2001. The growth in electricity generation has remained below electricity demand until recently, which made Turkey a net importer of electricity since 1997. In 2001, Turkey imported 4.6 billion kWh electricity and exported 0.4 billion kWh. Demand growth has slowed since the 2001 economic crisis but is expected to outpace electricity generation in 2008 unless new facilities become operational.

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 is responsible for regulating the electricity market, which will function on the basis of a pool system with multiple buyers and suppliers of electricity. EMRA foresees operation of the electricity market as of September 2002 and the natural gas market as of November 2002. Although EMRA has issued the secondary legislation and issued some electricity distribution licenses, further government action is necessary to introduce cost-reflective prices in the electricity market and to speed-up the privatization of the energy distribution network.

Telecommunications. 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 in October 2003.

Environment. With the establishment of a Ministry of Environment in 1991, environmental issues have taken on increased prominence. There have been dramatic improvements in certain areas, particularly air pollution in Istanbul and Ankara. However, Turkey faces new challenges as it strives to integrate environmental concerns into economic policy decisions. Turkey must raise its environmental standards to the level of the EU; implement and enforce stricter environmental policies; and modernize and expand the environmental infrastructure, such as 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 pursue its EU candidacy with the hope of getting a date in December 2004 for the beginning of the accession negotiations.

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 $12.5 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. Relations were strained when Turkey refused to allow U.S. troops to deploy through its territory to Iraq in Operation Iraqi Freedom, but mutual interests remain strong across a wide spectrum of issues.

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-- Eric S. Edelman
Deputy Chief of Mission--Robert S. Deutsch

Counselors
Political Affairs--John W. Kunstadter
Political-Military Affairs--Timothy Betts
Economic Affairs--Scot Marciel
Regional Affairs--Daniel Sheehan
Consular Affairs--Laura Dogu
Administrative Affairs--Kevin C. Milas
Public Affairs--James R. Moore
Agricultural Affairs--James Higgiston
Commercial Affairs--Amer Kayani
Defense/Air Attache--Col. Roman Hrycaj
Navy Attache--CDR Richard Holzknecht
Army Attache--Col. Martin Rollinson

Consul General Istanbul--David Arnett
Consul Adana--Walter S. Reid
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 atIstinye Mahallesi, Kaplicalar Mevkii No. 2, Istinye - Istanbul. (90) (212) 335-9000 ; 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.

For the most current version of this Note, see Background Notes A-Z.



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