Turkish lira tumbles again amid public anger

[Michael Pugliese <debsian@xxxxxxxxxxx>]

  I'm sure someone here has some words on the Turkish crisis. Or at least
some resources to check out on it. Esp. on demonstations against the
SAP/IMF.
http://dailynews.yahoo.com/fc/World/Turkey/
(And don't forget the Daewoo strikers in S. Korea.)

Michael Pugliese
............................................................................
...........................................................................
It is not going well Michael. My country is collapsing and there is nothing
I
can do but watch.

Best,
Sabri

Turkish lira tumbles again amid public anger
By Ralph Boulton


ANKARA, Feb 23 (Reuters) - Turkey's lira plunged below the key level of one
million to the dollar on Friday while IMF officials met in Ankara to seek a
way out of a financial crisis which has stirred furious condemnation of
Prime
Minister Bulent Ecevit.

In Washington, the White House said President George W. Bush had called
Ecevit on Friday to voice support and stressed what he said was the
importance of cooperating with the IMF.

With the currency down 36 percent in two days, Deputy Prime Minister Mesut
Yilmaz said the government planned a shake-up of economic management. A
senior official who asked not to be named said the reshuffle might extend to
ministerial level.

Economists feared the onset of a "crisis within a crisis" in the vulnerable
banking sector, an issue certain to be at the centre of emergency talks with
IMF officials in Ankara.

"I do not understand. You tell me for God's sake. Is this the way to rule
Turkey?," said Emin Colosan, a commentator in Hurriyet newspaper, reflecting
widespread bitterness after the virtual collapse of an IMF-backed financial
reform programme.

"This horrible picture, this disgrace is their (the government's) work," he
said of what is widely regarded as a needless crisis.

Ecevit, whose emotional public clash with his president triggered the
crisis,
flew abroad to a Balkan summit after a week that has seen his authority
seriously eroded. His row with the president, which he declared a state
"crisis," grew into a financial crisis which now threatens to have political
fallout.

The public sees inflation now being sucked into the economy by soaring
import
prices, and dreams of single-digit inflation by the end of 2002 are receding
quickly.

Carlo Cottarelli, head of the IMF's Turkey Desk, began work in Ankara to
hammer out a new, revised package to replace the package abandoned so
ignominiously this week, 14 months into its three-year term.

Turkish officials said inflation targeting would be at the heart of the new
policy and the central bank would be given independence to use interest
rates
to meet price targets.

NOT OUT OF THE WOODS

The old programme's collapse was signposted by a decision in the early hours
of Thursday to end controls on the lira that were central to the plan. The
lira fell 28 percent on Thursday and another 10.7 percent on Friday.

The central bank's afternoon fix against the U.S. currency on its
closely-watched spot market (CBTR) was 1,072,988 for bids and 1,078,163 for
offers, 36 percent down from before the float.

Earlier the lira fell as low as 1.2 million to the dollar.

Equity investors, however, chose to look on the bright side for a second
day,
as shares rose over five percent on expectations that the flotation would
alleviate recurring shortages of funds, freeing up funds for stock buying.
Tourism stocks surged on hopes they will profit from the weak lira.

Key interest rates fell back to around 530 percent from peaks of over 5,000
percent at the height of the crisis.

"We are not out of the woods yet," said Murat Gulkan, head of research at
Bender Securities. "The float has to be accompanied by a package addressing
several issues, the most urgent of which is how to clear up this banking
mess."

Devaluation holds deep dangers for a banking system whose weaknesses
triggered a crisis only three months ago. The IMF then put up $7.5 billion
to
rescue Turkey, only to see the programme collapse this week.

The system -- some 80 banks -- grew fat over years of high inflation that
allowed easy profit from trading government debt.

Failure to reform the system as inflation fell in line with the IMF
programme
presents one of the greatest risks for Turkey.

Eleven banks have been taken under administration, but high debts in foreign
currency, which will now cost more to service, could well force others into
difficulties.

Before flying out on Thursday evening, Ecevit brushed off demands from
business and labour groups for heads to roll.

But a senior official who declined to be named said there would be a
shake-up
of senior economic officials that could reach ministerial level: "The
government will send a fresh message as its starts a new (economic)
programme," he said.

POPULAR RESENTMENT

The crisis began on Monday when Ecevit and Sezer bickered over the pace of
an
anti-corruption drive.

The next political landmark in the crisis will be viewed with much
apprehension, not only by markets but by the population as a whole. Ecevit
must on Monday return to the meeting of the National Security Council (MGK)
he stormed out of and once again confront the president he so vehemently
denounced there.

Turkey has no tradition of mass defiance but social security has been eroded
and unemployment looms with implementation of the IMF-backed programme and
its privatisation plans.

"The Turkish people gave whatever was asked of them, did not say a
word...did
not rebel," the Sabah newspaper commented.

"They (the government and officials) failed but everyone stays in their
places and with the same words as 14 months ago... they go on asking for
sacrifices from the people."