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U.S./Turkey: Fresh Loan Pact Agreed As Ankara Awaits Decision On PKK

As Washington continues to negotiate the terms of Ankara's possible participation in its stabilization efforts in Iraq, both sides yesterday said they had reached an agreement on a new, hefty loan pact. Officials in both capitals deny the deal is aimed at winning over the Turkish public, which remains largely opposed to sending troops to the country's war-torn neighbor. Yet, one of the conditions attached to the loan pact is that Turkey must cooperate with the U.S. in Iraq.

Prague, 23 September 2003 (RFE/RL) -- After months of negotiations, the United States yesterday announced it would lend Turkey $8.5 billion in loans to bolster its fragile economy and offset costs engendered by the war on Iraq. The deal was signed in Dubai on the sidelines of the annual meeting of the World Bank and the International Monetary Fund (IMF).

Ankara's mainstream newspapers today say the U.S. loan has a 10-year maturity and will be paid out in four equal disbursements over about 18 months. The first installment is not expected until after the IMF completes a review of Turkey's economic progress in November.

U.S. market analysts note the terms of the loan agreement are very generous and that the package amounts to a de facto $1 billion gift to Turkey.

U.S. Treasury Secretary John Snow and Turkish State Minister Ali Babacan, who negotiated the agreement on behalf of their respective governments, both deny there is any direct link between the pact and Ankara's possible participation in U.S.-led stabilization efforts in Iraq. Yet, the agreement includes a number of requirements that have little to do with economic issues.

In comments last week to Turkish media, Babacan acknowledged that Ankara does not need this new loan and said political conditions attached to it were the main focus of talks with Washington.

Despite the rift in bilateral ties that followed Ankara's refusal to allow U.S. troops to use its soil to attack Iraq, U.S. President George W. Bush offered the money last March to help Turkey cushion any economic losses sustained from the war.

At the time, the White House made it clear the proposed loan would be contingent on Ankara carrying out economic reforms and making good use of an IMF-backed $16 billion loan program. The money was only a fraction of what Washington had initially offered Turkey in return for its full cooperation in the Iraq campaign.

Ties between the two NATO allies further deteriorated over the summer when U.S. troops in predominantly Kurdish northern Iraq detained a group of Turkish special forces allegedly on a covert mission to assassinate a local official.

U.S. officials have made no secret that they hope the new loan agreement would help mend fences with Ankara. But there is apparently more to it. Among conditions the U.S. Congress has set to release the new money is that Turkey "fully cooperates" with the U.S. in Iraq.

Turkish Prime Minister Recep Tayyip Erdogan, who held a series of bilateral meetings on the sidelines of the Dubai summit, has insisted the cooperation does not necessarily include dispatching troops to Iraq.

The U.S. is pressing a number of countries to help coalition forces in Iraq. Turkey, which sees stability in its southern neighbor as essential to its own security, has been asked to contribute up to 12,000 troops. Both sides have been negotiating conditions of the possible troop deployment for weeks, but no agreement has been reached yet.

The U.S. is opposed to allowing Turkish soldiers into northern Iraq for fear of clashes with the two main Kurdish factions that control the area. Ankara in turn demands tough U.S. action against its own Kurdistan Workers Party (PKK). Turkey blames the banned PKK for waging a 15-year separatist war in its predominantly Kurdish eastern provinces that claimed an estimated 35,000 lives.

Following the capture of PKK leader Abdullah Ocalan in 1999, many of Turkey's Kurdish armed militants sought refuge in neighboring countries. An estimated 5,000 PKK peshmerga fighters are believed to be hiding in northern Iraq's Qandil Mountains, near the border with Iran, and Ankara would like U.S.-led coalition forces to take action against them sooner or later.

In comments made yesterday in New York, where he is due to attend the United Nations General Assembly, Turkey's Foreign Minister Abdullah Gul said his country was dissatisfied with Washington's response to its security concerns and expected a "firm answer" over the PKK issue this week.

For Turkey's civilian and military leaders, securing a U.S. public pledge to move against Kurdish rebels is key to winning over domestic public opinion, which remains largely hostile to the idea of sending troops to Iraq.

Many in Ankara fear for the safety of Turkish soldiers and say Iraqis would perceive them as an occupation force under U.S. command. Others, like the influential Turkish Industrialists and Businessmen Association (TUSIAD), argue that sending troops without an international mandate might antagonize many Western nations and create additional obstacles to Ankara's membership bid in the European Union. Turkish President Ahmet Necdet Sezer is also opposed to any troops deployment that would not have the backing of the UN.

In comments made upon his departure for New York on 21 September, Gul hinted that Ankara might decide to contribute troops even without a UN Security Council resolution, arguing that "as a neighbor of Iraq," Turkey has greater regional responsibilities than other countries.

Drawing lessons from what happened seven months ago (2 March) when parliament failed to approve a government request authorizing the deployment of U.S. troops on national soil, Turkey's civilian and military leaders are reportedly considering other tactics.

Citing unnamed government officials, the Ankara-based "Turkish Daily News" yesterday said Erdogan's cabinet might this time decide to secure the approval of parliament -- which is expected to reconvene from summer recess on 1 October -- before drawing up a motion.

The idea was apparently floated on 19 September at a meeting of the National Security Council, a top advisory body that brings together senior cabinet ministers and military leaders. A statement issued after the four-hour-long discussions says participants also discussed ways to eliminate northern Iraq-based PKK fighters.

Government officials told the "Turkish Daily News" after the meeting that Ankara no longer seeks a firm U.S. pledge to take action against the PKK as a prerequisite to sending troops to Iraq. Rather, the daily quoted these officials as saying Ankara now hopes a Turkish troop deployment in Iraq would untie the U.S.-led coalition's hands and help it commit forces against the PKK.