World Bank agrees new $18bn loan to support Turkiye’s economic reforms

Food shop sellers attend clients in a street market at Eminonu commercial district in Istanbul, Turkey, Wednesday, Sept. 6, 2023. (AP)
Food shop sellers attend clients in a street market at Eminonu commercial district in Istanbul, Turkey, Wednesday, Sept. 6, 2023. (AP)
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Updated 08 September 2023
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World Bank agrees new $18bn loan to support Turkiye’s economic reforms

Food shop sellers attend clients in a street market at Eminonu commercial district in Istanbul, Turkey, Wednesday, Sept. 6, 2023
  • Deal suggests support for new finance minister, central bank chief, analysts say
  • Lender agreed $17bn funding deal prior to May election

ANKARA: The World Bank has unveiled a new $18 billion loan package for Turkiye in what appears to be a show of support for the government’s efforts to reshape its economic policy.

The deal, which comes on top of a $17 billion loan signed off by the lender earlier in the year, was announced just a day after President Recep Tayyip Erdogan and Vice President Cevdet Yilmaz presented their medium-term plan, which included targets for inflation, employment and economic growth for the 2024-26 period.

Two-thirds of the new loan are expected to be directed toward the private sector in the form of direct investments and guarantees. The remainder will help to finance public sector activities, including the extensive reconstruction work necessary after the devastating earthquakes that struck the southwest of the country in February.

Turkiye has a strong potential to rise once it adopts correct policies to address its macroeconomic imbalances.

Selva Demiralp, Professor of economics

In an interview with the state-run Anadolu news agency, Humberto Lopez, the World Bank’s country director for Turkiye, praised the government’s efforts to restore macroeconomic stability.

“We believe that the monetary policy tightening being implemented by the central bank, the unwinding of distortive financial regulations and the fiscal revenue measures to curtail the fiscal deficit being pursued by the Ministry of Finance are steps in the right direction,” he said.

“In addition to our ongoing $17 billion program, new operations worth $18 billion will be prepared and presented to the World Bank Group’s board of directors in the next three years.

“Taking into account all financing instruments, this amounts to an interim total financial package of approximately $35 billion.”

Amid an ongoing economic crisis, the appointments of former Merrill Lynch economist Mehmet Simsek as finance minister and ex-Goldman Sachs banker Hafize Gaye Erkan as central bank governor after the May election were seen as evidence of Turkiye’s determination to return to a more orthodox monetary policy. The $17 billion loan package was approved before that poll took place.

Timothy Ash, a London-based strategist at Bluebay Asset Management, said the timing of the new deal suggested an improvement in Turkiye’s relations with its Western allies, which would have been influential in the bank’s decision.

“We should now watch for other multilateral development banks and international financial institutions to follow suit and increase exposure,” he told Arab News.

The deal was “a vote of confidence” for Simsek and Erkan and their more orthodox policies, he said.

In its recently unveiled economic road map, Turkiye aims to become a high-income country, with a GDP of over $1.3 trillion and per capita national income of $14,855, by 2026.

The new medium-term economic plan includes reforms to public finances, trade, the investment environment, employment, human capital and disaster management. Simsek said Erdogan was fully behind the program.

However, experts like Wolfango Piccoli, co-president of London-based Teneo Intelligence, said that while the World Bank loan agreement was meaningful, it was “nothing close to a possible standby agreement” with the International Monetary Fund.

“Leaving aside the size of the package from the World Bank, a deal with the IMF would greatly boost investors’ confidence in Turkiye,” he told Arab News.

An IMF deal would also add transparency to the country’s public finances, including the guarantees provided by the Treasury for public-private partnership projects, and require agenda reforms that were politically unpalatable to the government, Piccoli said.

“The $18 billion in loans from the World Bank cannot achieve anything like that. I think most of the funds will be used for the reconstruction of the areas devastated by the earthquake,” he said.

“It is good news for Turkish firms who may be able to secure loans and guarantees from the World Bank but for foreign investors the package is unlikely to move the needle.”

Selva Demiralp, a professor of economics at Koc University in Istanbul, said the World Bank deal did appear to be a show of support for Turkiye’s post-election economic plans.

Turkiye "has a strong potential to rise once it adopts correct policies to address its macroeconomic imbalances,” he told Arab News.

“The evident abandonment of the policies that were implemented before the election is a strong step in the right direction. (However,) I have questions regarding the sustainability of the program that is laid out by the OVP (medium-term economic program).

“The World Bank seems more convinced. Then again, we are not present at investor meetings … so I cannot tell what will be different this time around by just looking at the OVP,” he said.

“Talking to the politicians directly might provide a clearer picture than what is hidden in the mid-term targets laid out in the program. It is true that the internal consistency of the OVP is much improved. Nevertheless, the document is notorious for missing its targets.

“The growth targets seem ambitious if the disinflation path will hold, for example,” Demiralp said.

“It might be possible with significant capital inflows, and the World Bank loan could be an important step in this direction. But that alone won’t be sufficient given that the toll of the earthquake itself is close to $100 billion.”

Meanwhile, leaders from the world’s top economies, including Turkiye and Saudi Arabia, convened in India on Friday for a two-day G20 summit.

The Turkish government has forecast inflation to hit 65 percent by the end of the year, before dropping to 33 percent in 2024. It also cut its economic growth forecast to 4.4 percent for this year and 4 percent in 2024. The nation’s current account deficit is expected to be $42.5 billion this year and $34.7 billion in 2024.

In June, the central bank increased interest rates to 25 percent, from 8.5 percent, in a bid to temper inflation, which rose to 58.9 percent last month.

The Turkish lira remained weak on Friday, at about 26.8 to the US dollar, down from 18 to the dollar at the same time last year.

 

 


Explosions heard near US embassy in Baghdad — videos

Updated 9 sec ago
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Explosions heard near US embassy in Baghdad — videos

Explosions heard near US embassy in Baghdad — videos
  • US forces at military bases in Iraq and Syria have faced more than 70 attacks since mid-October
BAGHDAD: Explosions were heard near the US embassy in Baghdad’s heavily fortified Green Zone early on Friday and sirens calling on people to “duck and cover” were activated, according to social media videos from the scene verified by an informed source.
Embassy spokespeople did not immediately respond to requests for comment.
It was not immediately clear whether the embassy’s air defense systems were activated or whether there was damage.
US forces at military bases in Iraq and Syria have faced more than 70 attacks since mid-October claimed by an umbrella organization of Iraqi Shiite Muslim armed groups, though diplomatic missions have been spared.
No group immediately claimed responsibility for any attack on the US embassy on Friday, which took place about 4 a.m.

Hundreds more Palestinians killed as Israel pursues Hamas in south Gaza

Hundreds more Palestinians killed as Israel pursues Hamas in south Gaza
Updated 08 December 2023
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Hundreds more Palestinians killed as Israel pursues Hamas in south Gaza

Hundreds more Palestinians killed as Israel pursues Hamas in south Gaza
  • The UN Palestinian Refugee Agency (UNRWA) said 1.9 million people — 85 percent of Gaza’s population — had been displaced and its shelters were four times over capacity

GAZA/JERUSALEM: Israel battled Hamas militants in the Gaza Strip’s biggest cities on Thursday, leaving hundreds more Palestinians dead as almost 2 million displaced Gazans struggled to find safe refuge amid critical shortages of food and shelter.
Residents reported fierce battles going on east of Khan Younis, southern Gaza’s largest city and Palestinian health officials said three Gazans were killed in an Israeli air strike on a house in Deir Al-Balah in central Gaza.
Israel said its forces killed a number of gunmen in Khan Younis, including two who emerged firing from a tunnel.
Israeli TV showed footage, which Reuters could not independently verify, of what it said were captured Hamas fighters, stripped to their underwear with heads bowed sitting in a Gaza City street.
Some Palestinians recognized relatives and denied they had any links to Hamas or any other group. Hani Almadhoun, a Palestinian American based in Virginia saw relatives in the picture and told Reuters they were “innocent civilians with no links to Hamas or any other faction.”
“They took them from a house, that belongs to the family, in the area of the market. They detained my brother Mahmoud, 32, his son Omar, 13, my other nephew Aboud, 27, and my father 72, and several of our in-laws.”
Israeli military spokesman Rear Admiral Daniel Hagari, said soldiers were fighting against militants in Hamas “centers of gravity.”
“During this fighting, those who stay in the area, come out of tunnels and some out of houses, we investigate and check who is linked to Hamas and who is not, we detain and interrogate all of them,” Hagari said. He did not speak directly about the images but said that hundreds of suspected militants have been interrogated so far and that many have surrendered in the past 24 hours.
Gazans have crammed into Rafah on the southern border with Egypt, heeding Israeli messages saying that they would be safe in the city after successive warnings to head south.
But more than 20 people were killed in apartments there late on Wednesday, said Eyad Al-Hobi, a relative of some of those killed.
“All apartments in the building suffered serious damage,” he said as people brought out two apparently lifeless children.
Another relative, Bassam Al-Hobi, said the building had been hit by three rockets and he gestured to bodies wrapped in white cloth, some small, on the ground and surrounded by mourners.
In Washington, a senior State Department official said US Secretary of State Antony Blinken spoke with Israel’s strategic affairs minister on Thursday, and told him Israel needs to do more to protect civilians in its offensive in southern Gaza.

NEW PHASE
Israeli troops reached the heart of Khan Younis on Wednesday in a new phase of the war, now entering its third month. Health officials said three people were killed there on Thursday.
Ambulances and relatives rushed the wounded into the city’s Nasser hospital, but even the floor space inside was full. Two badly wounded children lay on a trolley and a bloodstained young boy lay screaming among the patients on the floor.
“The injuries are very severe,” said doctor Mohamed Matar. “The situation is catastrophic in all senses of the word...We can’t treat the injured in this state.”
Those who escape violence face an increasingly desperate struggle to survive.
Ibrahim Mahram, who fled to Al Mawasi, said five families were sharing a tent in the former Bedouin village, which refugee organizations say lacks shelter, food and other necessities.
“We suffered from the war of cannons and escaped it to arrive at the war of starvation,” he told Reuters.
The UN Palestinian Refugee Agency (UNRWA) said 1.9 million people — 85 percent of Gaza’s population — had been displaced and its shelters were four times over capacity.
UN refugee chief Filippo Grandi said pressure was growing in the south of the enclave near Egypt.
“People are piling up in the little sliver of land between Khan Younis and the Rafah border,” he told Reuters.
The Gaza health ministry said 17,177 Palestinians had been killed and 46,000 wounded since Oct 7, when Israel began bombing Gaza in response to an assault by Hamas militants who control the enclave. In the past 24 hours alone, 350 people had been killed, ministry spokesman Ashraf Al-Qidra said.
Israel says it must wipe out Hamas and is doing everything possible to get civilians out of harm’s way.
BOMBING AND GUNBATTLES
Israel said it had raided a Hamas compound in Jabalia, killing several gunmen and found tunnels, a training area and weapons.
The armed wing of Hamas said fighters had destroyed or damaged 79 army vehicles in Gaza City in the past three days but did not produce evidence.
The surprise Hamas incursion on Oct 7. killed 1,200 people, with 240 people taken hostage, according to Israel’s tally.
The Israeli military says 88 soldiers have been killed in ground incursions into Gaza that began on Oct. 20.
The UN has been unable to distribute aid in any part of Gaza except for the area around Rafah for the past four days, it said in its daily humanitarian report on Thursday.
A senior Hamas official told Reuters mediators were still exploring opportunities for a truce and reiterated its demand that Israel cease its attacks but the White House said Israel and Hamas were not close to a deal on a humanitarian pause.
UN aid chief Martin Griffiths said on Thursday there were promising signs that the Kerem Shalom crossing in Israel could soon be opened to allow more humanitarian aid into Gaza.
A guided-missile attack from Lebanon killed a 60-year-old farmer in northern Israel on Thursday, Hagari said, and Prime Minister Benjamin Netanyahu warned that Beirut would be turned “into Gaza” if Hezbollah, a Hamas ally, started an all-out war.
The White House said on Thursday that Israel and Hamas were not close to another deal on a new humanitarian pause and release of further Israeli hostages.
 

 


As aid runs out, Syria’s displaced fear dying of hunger

As aid runs out, Syria’s displaced fear dying of hunger
Updated 08 December 2023
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As aid runs out, Syria’s displaced fear dying of hunger

As aid runs out, Syria’s displaced fear dying of hunger
  • The WFP said it “regrets to announce the end of its general food assistance across Syria in January 2024 due to lack of funding.”

ATME, Syria: Displaced people in camps in northeast Syria have expressed fears about their future after the World Food Programme announced the end of food assistance across the war-torn country.
“Stopping aid to the camps will exponentially increase suffering,” said Ali Farahat, the director of the Maram camp for the displaced in the town of Atme near the border with Turkiye.
“Some have told me ‘if aid stops, we will die of hunger’,” he told AFP on Wednesday.
In a statement issued on Monday, the WFP said it “regrets to announce the end of its general food assistance across Syria in January 2024 due to lack of funding.”
The United Nations’ food aid agency said it would “continue supporting families affected by emergency situations and natural disasters across the country through smaller and more targeted emergency response interventions.”
It told AFP the “decision is based on funding, which is a global issue that WFP faces.”
In September, the WFP had warned that insufficient funds had forced it to reduce assistance in various parts of the world, pushing an estimated 24 million people to the brink of famine.
In July, 45 percent of aid recipients in Syria were cut from assistance, it said.
“WFP’s activities by nature are fully scalable meaning they can be reduced or increased based on needs and available resources,” the agency told AFP.
Around three million people live in areas controlled by the Hayat Tahrir Al-Sham (HTS) militant group in Idlib province.
Roughly half live in camps for the displaced, while others reside in abandoned buildings or caves, or even in old buildings and rusty buses.
Camps for the displaced are often overcrowded and lack basic needs, with residents depending principally on food, medical and other aid provided by international organizations.
Residents of those camps in northeastern Syria, including Maram in Atme, are likely to be the hardest hit by the WFP decision.
Maram’s residents could be seen queuing up to receive some of the last of their aid rations of the year.
“Stopping assistance will lead to the death of those who subsisted on them because they don’t have money to buy food,” said Ahmed Adla, 40, who was displaced 11 years ago from the village of Kurin in Idlib’s countryside.
Khaled Al-Masri, 45, displaced nearly 13 years ago from the nearby village of Hass along with 11 family members, said: “I hope they come to see our conditions and how we spend the winter. We can’t keep our children warm.”


Fears of US veto loom large on eve of UN Security Council vote on Gaza ceasefire call

Fears of US veto loom large on eve of UN Security Council vote on Gaza ceasefire call
Updated 26 min 25 sec ago
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Fears of US veto loom large on eve of UN Security Council vote on Gaza ceasefire call

Fears of US veto loom large on eve of UN Security Council vote on Gaza ceasefire call
  • Saudi envoy expresses hope the US will allow adoption on Friday of resolution drafted by the Organization of Islamic Cooperation and the UN’s Arab Group of nations
  • An 8-member ministerial delegation, led by Saudi Foreign Minister Faisal bin Farhan, arrived in Washington on Thursday in attempt to rally US support for the resolution

NEW YORK CITY: All eyes will be on the US during a meeting of the UN Security Council on Friday, when the 15-member body is due to vote on a draft resolution demanding an immediate ceasefire in Gaza.

However, Robert Wood, alternate permanent representative of the US to the UN, indicated that Washington continues to dismiss the need for any additional action by the council “at this time.”

The resolution was drafted by the Organization of Islamic Cooperation and the Arab Group of nations at the UN, and presented by the UAE, which currently occupies the Arab seat on the council.

The text, seen by Arab News, demands “an immediate humanitarian ceasefire” in Gaza and “the immediate and unconditional release of all hostages, as well as ensuring humanitarian access.”

It expresses “grave concern over the catastrophic humanitarian situation in the Gaza Strip and the suffering of the Palestinian civilian population, and (emphasizes) that the Palestinian and Israeli civilian populations must be protected in accordance with international humanitarian law.”

The vote on the resolution follows a dramatic constitutional move by UN Secretary-General Antonio Guterres on Wednesday, when he invoked one of the few powers provided to him by the UN Charter by calling on the Security Council to demand a ceasefire, to help avert a humanitarian catastrophe in Gaza that could have “potentially irreversible implications for Palestinians as a whole, and for peace and security in the region.”

In a letter to the council, he said more than eight weeks of fighting has “created appalling human suffering, physical destruction and collective trauma across Israel and the Occupied Palestinian Territory.”

Wood said that Washington’s position on the issue remains unchanged, despite the historic appeal by the secretary-general for an immediate ceasefire.

“We don’t think another Security Council product right now is going to be helpful to the situation,” said Wood.

His country is currently focused on “difficult and sensitive diplomacy geared to getting more hostages released, more aid flowing into Gaza, and better protection of civilians,” he added.

The US has been working to persuade Israeli authorities to recalibrate their approach so that the targeting of Hamas facilities and the group’s leadership is more precise, Wood said. This process will take time, he added as he expressed concern about the number of Palestinians killed and injured but said he remains confident that Israeli authorities are listening to the US calls.

Saudi Arabia’s permanent representative to the UN, Abdulaziz Alwasil, said he remains hopeful that the US, one of five nations that holds the power of veto within the Security Council, will allow the resolution to be adopted on Friday.

Flanked by 57 representatives of the OIC and the Arab Group, he said an eight-member Arab ministerial delegation, empowered by the Riyadh Summit on Nov. 11 and led by Saudi foreign minister Faisal bin Farhan, arrived in Washington on Thursday morning for meetings with members of Congress and representatives of President Joe Biden’s administration, including Secretary of State Antony Blinken, during which they would “push for accepting the resolution presented by the Arab group.”

Riyad Mansour, the permanent observer of the state of Palestine to the UN, also expressed “sincere hope” that the Security Council will adopt the resolution and “listen to the brave, courageous principled position of the secretary-general, (which) gives you an indication of how dangerous the situation is in the Gaza Strip.”

Asked about the possibility that the Arab ministerial delegation in Washington would fail to change the view of the Biden administration about a ceasefire call, Mansour highlighted the international isolation of the US on the issue.

He said: “We are calling for a ceasefire. The secretary-general is calling for a ceasefire. All UN agencies are calling for a ceasefire. (Josep) Borrell (the EU’s foreign policy chief) is calling for a ceasefire. The EU is doing the same, (French President Emmanuel) Macron (too), not to mention Russia and China and many others.

“(Also) people in the streets, including the Jewish American community, particularly the young generation, who took over Grand Central Station (in New York), and the (other) millions in the streets.

“All of them are saying, ‘We want a ceasefire.’ (So) those who are opposing a ceasefire are among the very small minority. The lives of children are precious, so any effort to save their lives is in line with humanity and any effort not to save their lives is in contradiction to humanity.”


US imposes sanctions on Iran-backed network funding Yemen’s Houthis

Houthi supporters rally to show support to Palestinian factions, in Sanaa, Yemen October 7, 2023. (REUTERS)
Houthi supporters rally to show support to Palestinian factions, in Sanaa, Yemen October 7, 2023. (REUTERS)
Updated 08 December 2023
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US imposes sanctions on Iran-backed network funding Yemen’s Houthis

Houthi supporters rally to show support to Palestinian factions, in Sanaa, Yemen October 7, 2023. (REUTERS)
  • The sanctions freeze all properties and interests in the United States of those targeted and generally prohibit Americans from conducting transactions with them

WASHINGTON: The United States imposed sanctions on Thursday on 13 individuals and entities for allegedly funneling tens of millions of dollars in foreign currency to Yemen’s Houthi group from the sale and shipment of Iranian commodities.
The US Treasury said in a statement that the Islamic Revolutionary Guard Corps, Iran’s paramilitary and espionage force, backed the scheme involving a complex web of exchange houses and firms in multiple countries, including Yemen, Turkiye, and St. Kitts and Nevis.
Treasury Undersecretary Brian Nelson said funds provided by Iran have enabled recent attacks by the Houthis on commercial shipping in the Red Sea that endanger international trade.
“The Houthis continue to receive funding and support from Iran, and the result is unsurprising: unprovoked attacks on civilian infrastructure and commercial shipping, disrupting maritime security and threatening international commercial trade,” the Treasury statement quoted Nelson as saying.’
The Houthis say they have been staging drone and missile attacks against Israel and Israeli ships in the Red Sea in response to the offensive Israel launched against Hamas in Gaza after the Oct.7 rampage into Israel by Hamas militants.
Iran denies any involvement in the attacks.
Washington has said that US warships have downed missiles and drones fired by the Houthis although the Pentagon says it has not been clear that the American vessels were actually targeted. US warships have also intercepted attacks on commercial ships that the US military says were linked to multiple nations.
The sanctions freeze all properties and interests in the United States of those targeted and generally prohibit Americans from conducting transactions with them.
The Treasury said that the targeted network involved Said Al-Jamal, a key “Iran-based Houthi financial facilitator,” and Bilal Hudroj, who runs a Lebanon-based exchange house, both of whom already are under US sanctions.
Jamal has for years used a web of exchange houses in Yemen and abroad to funnel the proceeds of Iranian commodity sales to the Houthis and the IRGC, the Treasury said, adding that Hudroj has assisted in the remittances to the Houthis.
The 13 entities and individuals hit in the latest sanctions include a jewelry shop and exchange house in Turkiye, the Treasury said, as well as exchange houses, shipping agents and individuals in St. Kitts and Nevis, Britain and Russia.