Cablegate: Turkey's Economy March 5 Am: Markets Begin To
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 02 ANKARA 001406
STATE FOR E, P, EUR/SE AND EB
TREASURY FOR U/S TAYLOR AND OASIA - MILLS
NSC FOR QUANRUD AND BRYZA
E.O. 12958: N/A
TAGS: ECON PREL TU
SUBJECT: TURKEY'S ECONOMY MARCH 5 AM: MARKETS BEGIN TO
RALLY ON HOPES OF SECOND RESOLUTION
REF: ANKARA 1378
Sensitive but unclassified, and not for internet
1. (SBU) Summary: Turkish financial markets improved
throughout the morning of March 5, and at mid-day appeared
poised to continue a rally. Yields on T-bills strengthened
five percentage points in morning trading. This positive
market sentiment is based on two statements indicating that
the GOT will seek a second parliamentary resolution. First,
on March 4 evening, AK Chairman Erdogan told the AK
parliamentary group that "daily emotions" should not be the
basis of national decision-making, and that the MPs should
take decisions based on the country's future. Second, at
mid-day March 5, TGS Chief of Staff Ozkok told the press the
military had the same view as the GOT regarding the
parliamentary resolution on troop deployments. Also on March
5, Deputy PM Sener defended the 2003 budget macro-economic
targets, especially the 5 percent growth target, against
press criticism. End Summary.
Markets Up On Erdogan and Ozkok Statements
2. (U) At mid-day March 4, Turkish markets had rebounded
from the lows of Monday morning March 3 and appeared poised
to continuing strengthening.
-- The benchmark T-bill (maturity of March 3, 2004)
strengthened 5 percentage points in morning trading, from
yesterday's 62.5 percent to 57 percent.
-- The lira appreciated about one percent, closing at TL
1,621,000 to the dollar.
-- The Istanbul stock exchange was flat in morning trading,
but analysts say it will jump up following the noon lunch
Chief of Staff Ozkok Statement Supportive of GOT
3. (SBU) Before meeting with Northern Cyprus leader Rauf
Denktas in early afternoon March 5, TGS Chief of Staff Hilmi
Ozkok issued a press statement that addressed in part the
troop deployment parliamentary resolution. Ozkok said:
-- "The Turkish military's view is the same as the
Government's view as reflected in our government's resolution
submitted to our parliament."
Erdogan's General Statements Underpin
Local Market Optimism
4. (SBU) Behind market optimism lies AK chairman Erdogan's
statements on the evening of March 4 to his parliamentary
group. These general statements, well covered on TV and
newspapers March 5, are being interpreted by markets here as
indicating his intention to force a second parliamentary vote
once he becomes PM. Locals see an implied threat that those
AK MPs who don't vote with him will "not be fulfilling the
responsibilities placed on us by the people."
5. (U) Following are the parts of Erdogan's speech to the AK
parliamentary group reported in local press as "on the
subject of the second parliamentary resolution":
-- "Those who hold positions of responsibility must not rely
on daily emotions when making steps forward. It is
imperative to take decisions aimed at managing the country's
-- "I also understand my friends' hesitations. But if we
don't look at issues from all perspectives, we can't fulfill
the responsibilities placed on us by the people and we can't
do our duties."
-- Erdogan also had an implied warning for the U.S., per the
local press, when he told press before the Group meeting,
"For Turkey's own security and the territorial integrity of
Iraq, we will not remain observers. ON the subject of
intervening to address problems, which method will be applied
will be decided in the coming days."
Deputy PM Sener Defends Macro Targets
6. (U) On March 5 morning, Deputy Prime Minister Sener
defended the 2003 budget's macro-economic targets against
recent press criticism. He stressed there is no plan to
revise the 5 percent growth or other targets. Speaking
before the Ankara Chamber of Industry, he said:
-- The fiscal saving measures announced by the government
(note: a total of TL 15.8 quadrillion or nearly $10 billion,
reftel) will not lead to a contraction of domestic demand and
will not slow the growth rate.
-- "There is no problem in reaching the year-end inflation
targets" (note: targets are 20 percent CPI and 17.4 percent
WPI, though first two months WPI is already over 8 percent.)
WPI will drop in coming months, he predicted.
-- Asked about the high interest rates in the March 4
Treasury debt auctions, he said expects rats to decline in
coming months and not to present debt roll-over problems.