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Turkey: Constitutional Changes To Speed Foreign Investment Proposed

By Gokalp Bayramli

In an effort to encourage foreign investment in Turkey, Ankara wants to allow foreign companies to hold majority stakes in Turkish firms. Currently, foreign firms cannot control more than 49 percent of a Turkish business. The International Monetary Fund also says Turkey must accept international arbitration in economic disputes between Turkish and foreign firms before it will approve short-term credits to Ankara. The opposition says national sovereignty is at stake. Our correspondent in Istanbul, Gokalp Bayramli, reports:

Istanbul, 6 August 1999 (RFE/RL) -- Turkish Prime Minister Bulent Ecevit says that changing the constitution to allow international arbitration in Turkey will speed up the country's privatization process.

Ecevit says he believes it is in Turkey's national interest to encourage foreign companies to make investments in Turkish firms, especially in the country's energy sector. The government needs 367 votes in parliament for the constitutional change to allow international arbitration. It currently only has the support of around 350 deputies.

Ecevit accuses those who are opposed to international arbitration of following what he called an "anachronistic type of leftism." Ecevit:

"In Turkey, some circles think that opposing every new development is progressiveness or revolutionism. This is an old habit. I remember in my youth, when the first Hilton hotel was built in Turkey, some circles had said, 'Oh no, 'capitulations' have come to Turkey."

Opponents of the arbitration issue often link it to the so-called "capitulations" of Ottoman times, when broad concessions were made to foreigners and foreign enterprises. This led to an increasing state of financial dependence by the Ottoman empire on the Western powers.

Ecevit says there is unity, though, among the government's three coalition partners about the international arbitration issue.

Devlet Bahceli is deputy prime minister and chairman of the right-wing Nationalist Action Party. He says the international arbitration issue is being exaggerated and that it is wrong to say that the independence of the state and the republic is going to be lost if arbitration is permitted.

The main opposition Virtue Party (FP) of Recai Kutan opposes international arbitration. Kutan accuses the government of taking risky steps and of carelessly threatening social peace in order to fulfill the requirements of the IMF.

According to Kutan, Turkey should try itself to create an atmosphere of trust with foreign investors instead of passing problems along to a foreign institution. In a recent newspaper interview, he said this is tantamount to saying: "We have not been able to cope with this, let foreigners do it."

"Where is our sovereignty," Kutan asks. "Where is our honor and where is our nationalism?"

The government is unsure about the position of Turkey's other main opposition party, the True Path Party (DYP). The True Path Party is tying its support to the condition that only foreign companies should be permitted to call for international arbitration, while conflicts between Turkish enterprises would be resolved solely within the Turkish legal system.

Uluc Gurkan is a member of the governing Democratic Left Party. In a recent interview, he once again emphasized the importance of placing international arbitration in a broader perspective:

"Nowadays, we are experiencing a period of international integration in many areas, for example, democracy and human rights. But without a doubt, long before the areas of democracy and human rights, there was an integration process in economic relations. No state can stand outside of this integration process. No state can exist beside of this process."

Additionally, Gurkan hinted that with the realization of oil pipeline projects from Central Asia and Azerbaijan, the doors must be open in Turkey for foreign energy investors.