Turkey's Meager Harvest of Gulf Promises
TURKEY'S early support of the United States-led coalition against Iraqi aggression was viewed as crucial. President Turgut Ozal's commitments to shut Iraq's oil pipelines through Turkey, to honor the trade embargo, and to allow the coalition full use of air bases in Turkey were no small sacrifice, economically or politically. Many Turks, however, believe that Turkey has been thanked with little more than empty promises. Turkey's economic situation is worse than before the war. The impact has been greatest in lost oil revenue, a significant drop in tourism, lost remittances from Turkish workers in the Gulf, and a shrinkage of export markets. Turkey's loss of oil revenue from shutting down the Turkish-Iraqi pipelines has been estimated at over $2 billion. Oil revenues won't return to previous levels as long as restrictions remain on Iraqi oil exports. Turkey's 1989 deficit of $2.4 billion will likely rise to $4 billion f r
om 1990 through at least 1992.
Turkey's expanding tourism industry reached $2.5 billion in 1989. The Gulf crisis, however, depressed 1990 revenues to an estimated $1.1 billion. Tourism revenues for 1991 have been estimated at $1.5 billion, a 60 percent drop in less than two years.
Remittances from Turkish workers in the Gulf have also dropped dramatically. Much of the lost revenue cannot be recouped, as the 4,000 Turkish workers who had been in Iraq will not soon return. Of the 2,000 Turkish workers previously in Kuwait, many will be unable to return to their jobs due to increased competition from Egyptian, Bangladeshi, Pakistani, and Indian workers. Loss of remittances may result in a crowding effect on the Turkish government by a private sector trying to raise capital.
Losses will also be felt in export revenues. Of Turkey's $11 billion to $12 billion export revenues in 1989, 32 percent were from Islamic countries. Thus, over $3.8 billion of export revenue has been disrupted. There will be no return of revenues from the largest Islamic market, Iraq, in the near future.
Due to the composition of Turkey's exports, the US and Europe can do little to help Turkey recoup its losses. Eastern Europe, which receives 6 percent of Turkey's exports, is unable to provide any offset. Western Europe, which receives 55 percent, will be pressured to increase imports from Eastern Europe rather than from Turkey. As for the US, relaxed textile quotas are not enough to offset lost Turkish exports to Islamic countries.
While the Gulf war has resulted in revenue losses, it has also resulted in pressure to increase spending on military defense. Inflation, which had only recently declined to reasonable levels, will be fueled, while Turkey's slow growth will fall short of financing projected defense spending.
O compensate, at least in part, for Turkey's economic losses, the US, Europe, and other coalition members (including Japan) have promised $4 billion in aid. Even if paid in full, coalition aid will fall $1 billion below Turkey's estimated 12-month cost of $5 billion. The shortfall will come at a time of dwindling foreign-currency supplies and a weakening lira. Coalition members have also been slow to honor their pledges. Thus far, Turkey has received only $1.6 billion of the $4 billion pledged.
On the political front, the coalition's victory has no doubt provided a degree of relief for President Ozal. In addition to devastating the Iraqi military machine, the triumph has, for the time being, suppressed Iran's ability to exercise its power in the region or extend its reach.
However, recent attempts by coalition members to aid the Kurds, although correct, may fuel instability. The creation of an autonomous region along the Turkish-Iraqi border will inflame Kurdish nationalism throughout the region. One cannot promote Kurdish nationalism in Iraq but suppress it in Turkey without creating the potential for long-term instability.
Some analysts say that Turkey's position as a strategic ally of the US will be enhanced. This, they say, will help Turkey achieve one of its greatest goals: becoming a full, voting member of the European Economic Community (EEC). But America's goodwill cannot be translated into the political capital that would influence Europe to accept Turkey into the EEC. The Community's objections have been stated in terms of Turkey's economic and political "impediments." While the economy's structural and sectoral " i
mpediments" are real, the main obstacle is in fact political. This is particularly true of Greece. Turkey's role in the Gulf war will likely have little impact on these dynamics.
Any benefit to Turkey, as compensation for its sacrifices during the Gulf crisis, will be indirect and in the future. Seen through Turkish eyes, Ozal's harvest of promises may be a poor crop indeed.