TURKEY: parliament boycott foils privatisation

12 August 1994

FAILURE by most of parliament to attend a crucial end-July vote before going back into summer recess spelled disappointment and delay yet again for Prime Minister Tansu Ciller's ambitious privatisation plans.

Lacking a quorum, a vote on a comprehensive privatisation bill was delayed until parliament reconvenes on 1 September. This has proved to be a significant blow to Ciller who was looking to the revenues from privatisation to help cut the budget deficit.

Many deputies from Ciller's own True Path Party (DYP) stayed away. None from the main opposition Motherland Party (ANAP) were in attendance. The bill was rushed onto the floor of the house following the most recent of several successful actions brought in the constitutional court against privatisation legislation.

The government had hoped that the new comprehensive law would overcome the court actions which had prevented Ciller from pushing through privatisation by decree.

The failure to get the law through parliament means that the court rulings will stand. The government is also faced with the likelihood that the court will continue to block plans for the privatisation of the Turkish Electricity Board (TEK).

The privatisation process has been thrown into disarray. One of the five invalidated decrees had led to the establishment of a focussed Privatisation Agency from the previous Public Participation Administration (PPA). Payments to foreign creditors are doubtful as legally both agencies do not exist. Contractors may also encounter delays to payments, because the court rulings came before PPA revenues from sources such as levies on luxury imports could be channelled through the government instead of the treasury.

It is unlikely that the tight denationalisation schedule set in the 5 April economic recovery package will be adhered to. For example, the deadline for bids for the government's share in the Eregli Iron and Steelworks (Erdemir) on the Black Sea has been extended to 12 August. With expected revenues of $300 million-400 million, this deal was expected to set in motion a series of large privatisations during the remainder of 1994 including the Turkish Petroleum Refineries Corporation (TUPRAS) and refined products distributor Petrol Ofisi (POAS). Officials admit that revenues from privatisation will probably come in well under the target of $2,300 million set for 1994.

In its letter of intent for an IMF stand-by facility approved in July, the government said it would sell off two banks and complete studies on the key denationalisation of the giant posts, telegraphs and telephones administration. But it is not certain that the comprehensive privatisation bill will be passed by a reconvened parliament in September.

The cross-party resistance to privatisation legislation has been led by Ankara member of parliament Mumtaz Soysal, from the DYP's junior coalition partner, the Social Democratic Populist Party (SHP). Soysal has now been appointed foreign affairs minister. It is doubtful that this promotion will tame Soysal's opposition to privatisation.

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