DUBAI, 23 September 2003— The United States yesterday granted Turkey a loan of up to $8.5 billion to help Ankara’s economic reform program and soften the blow struck to its battered economy by the war in neighboring Iraq.
Announcing the loan on the sidelines of the IMF meeting in Dubai, US Treasury Secretary John Snow said Turkey must in return cooperate with the United States in Iraq.
But he insisted that the deal was in no way linked to possible Turkish military involvement in the country’s reconstruction.
Washington has been pressing hard on Ankara to send troops to aid rebuilding the increasingly lawless Iraq, but the government of Prime Minister Recep Tayyip Erdogan has refrained from taking a decision due to strong objections at home.
“The purpose of the assistance is to support Turkey’s ongoing economic reform process, and to mitigate the economic impact on Turkey related to Operation Iraqi Freedom,” Snow said in a statement.
“It is in the US interests that Turkey maintain its economic stability and continue its ambitious economic and political reform process. The US assistance aims to reinforce the Turkish government’s own economic policies,” he added. Turkey’s economy is emerging from the worst crisis in its modern history, after turmoil in the banking sector sent markets plunging and investors fleeing the country in 2001.
But spurred by its drive to join the European Union, Erdogan’s government has embarked on an ambitious economic reform program to bring the country’s budget and inflation rates under control. Turkey, an EU candidate since 1999, is the only one among 13 candidates which has yet to start membership talks with the Union.
The EU has said it will decide in 2004 whether to start talks with Ankara.
Turkey has also been helped by a $16 billion standby credit deal extended by the IMF. Snow praised the “great strides” made by Turkey in recovering from the crisis of 2001, saying the country’s growth had been strong over the past year and a half, while inflation had returned to historic lows.
The loans from the United States carry a maturity of 10 years, with a four-year grace period for repayment, and will be paid out over an 18-month period in four equal installments.