TRKNWS-L Turkish Daily News excerpts (January 1, 1996)

From: "Demetrios E. Paneras" <dep@bu.edu>

Turkish News Directory

CONTENTS

TURKISH DAILY NEWS / 1 January 1996

[01] Turco-Syrian relations get tense over water

Turkish Daily News

ANKARA- The tensions between Turkey and Syria over the water question was carried into the new year as Foreign Minister Deniz Baykal accused Syria of wanting to wash the blood on their hands with more water.

Baykal, in a press conference which aimed to sum up the foreign policy issues of 1995, urged Syria to take up a new attitude in its relations with Turkey.

"There has never been any problem between Turkey and Syria regarding the water question," said Baykal. "Turkey always solved the problem by providing extra water to Syria." A demarche was issued to Syria on Sunday which said that earlier Syrian claims of pollution of the Euphrates' water let downstream to Syria were unfounded.

"The Turkish projects aim at a steady and regular flow of the Euphrates, which will benefit Syria," a statement from the Turkish Foreign Ministry said on Sunday.

Ankara also reaffirmed its readiness to discuss a three-stage plan which would aim to allocate and determine the use of the Euphrates waters among the riparian countries. The ministry statement also urged Syria to come to the table to discuss the plan which Turkey first proposed in 1984.

"Some circles may claim that they need additional water to wash the blood of terrorism from their hands," Baykal said, in a thinly veiled reference to Syria's support to the terrorism of the outlawed Kurdistan Workers' Party (PKK).

Baykal said that the PKK was supported by Syria and its leader, Abdullah Ocalan, was allowed to reside in this country.

The outgoing foreign minister's remarks coincide with a two-weeks long tension between the two neighbors, ever since Syria protested to Turkey over the construction of Birecik Dam, which is a bay dam designed to regulate the excessive flow which might emerge from the major Ataturk Dam, the pillar of Turkey's Southeast Anatolia project.

Syria, uneasy with the construction, has lobbied vis-a-vis various Arab and Western states. Egypt and six Gulf Arab states on Thursday sided with Syria in its water dispute with Turkey, urging Ankara to sign a just agreement with Damascus on sharing the Euphrates' waters.

Foreign ministers of the seven countries, ending their meeting in Damascus with their Syrian counterpart, criticized Ankara for building dams on the river without consulting with the other states through which it flows -- Syria and Iraq.

The communique made by the ministers has called for a permanent water-sharing agreement to replace a provisional accord under which Ankara allows the flow of only 500 cubic meters of water per second to Syria.

The eight Arab ministers, whose countries form the so-called Damascus Declaration alliance, said in their final communique that they were briefed on the flow of polluted water from a Turkish irrigation project into Syria.

"The ministers call upon the Turkish government to stop allowing dirty waters to flow to Syria and to reach a just and acceptable agreement on the sharing of the Euphrates waters," it added.

It was the first time that Syria's seven allies, who maintain good relations with Turkey, referred to the dispute in the alliance statements.

The six Gulf Arab states in the alliance are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The communique came a week after Arab League made a similar declaration to Turkey, summoning Turkey's Ambassador to Cairo Yasar Yakis to urge Turkey to reach a just agreement with Syria.

[02] Turkey to Buy AMRAAM and SEASPARROW missiles from US

Turkish Daily News

WASHINGTON- The U.S. Department of Defense awarded on Friday three new contracts to Hughes and Raytheon corporations for production of air-to-air (AMRAAM) and SEASPARROW missiles.

Turkey is among the countries that will take delivery of some of the production. The exact number of missiles that will be sent to Turkey could not be verified.

In the first contract, Hughes Missile Systems Company, Tucson, Arizona, is awarded a $12,919,868 "time and materials contract" to provide "technical support" for the production of Advanced Medium Range Air-to-Air Missiles (AMRAAM). The contract is expected to be completed December 1996. There was one firm solicited and one proposal received. Solicitation began September 1995 and negotiations were complete December 1995, according to the Pentagon.

Denmark, Finland, Germany, Greece, Korea, the Netherlands, Norway, Switzerland, Turkey, and the United Kingdom are the countries to which the missiles will be delivered as a part of the "foreign military sales" program they have with the United States.

In the second contract, Raytheon Company, Electronic Systems Division, of Sudbury, Massachusetts, is awarded $18,284,398 as a "modification" to a previously awarded contract to produce "long lead materials" for SEASPARROW Surface Missile System production. Work will be performed in Sudbury, Massachusetts, and is expected to be completed by July 1998.

According to a Department of Defense news release: "This contract combines purchases for the governments of Japan (49 percent), and South Korea (31 percent), under the Foreign Military Sales (FMS) Program, and for members of the NATO SEASPARROW Consortium which includes the governments of Turkey (16 percent), Australia (3 percent) and Canada (1 percent). ...

"This contract was not competitively procured," the Pentagon added.

Raytheon Company, Electronic Systems Division, Sudbury, Massachusetts, is awarded an additional $11,452,835, again as a "modification" to a previously awarded contract, to produce SEASPARROW JetVane Control Units. The majority of the production will take place in Andover, Massachusetts (60 percent), as well as in Huntsville, Alabama (30 percent), Sudbury, Massachusetts (5 percent), and Bedford, Massachusetts (5 percent), and is expected to be completed by January 1998.

"This contract combines purchases for the governments of Japan (25 percent), and South Korea (21 percent), under the Foreign Military Sales (FMS) Program, and for members of the NATO SEASPARROW Consortium which includes the governments of Canada, (33 percent), and Turkey (21 percent)," the Pentagon said. This contract was also "not competitively procured."

Turkey's recent purchase of 120 ATACM missiles for $130 million stirred up some resistance in the U.S. Congress and galvanized to action the anti-Turkish ethnic lobbies who opposed the sale on a number of unrelated issues that varied from Turkey's human rights record to the situation in Cyprus, the fight against the Kurdistan Workers' Party and the embargo on Armenia.

[03] Foreign minister denies government was by-passed on Cyprus declaration

ANKARA- The allegations that the presidency has by-passed the government in formulating a declaration of solidarity with the Turkish Republic of Northern Cyprus (TRNC) are unfounded, the Turkish foreign minister said over the weekend.

Foreign Minister Deniz Baykal, in a press conference aimed at summing up the foreign policy issues of 1995, said that the government and the Foreign Ministry had decided to invite TRNC President Rauf Denktas before the meeting of the National Security Council.

Baykal's words refer to newspaper items that it was President Demirel, bypassing Prime Minister Tansu Ciller, who urged Turkish support for the TRNC. It was also claimed that Ciller only learned of the visit during a National Security Council meeting a day before the visit.

When Denktas visited Turkey, the two presidents made a joint summit declaration saying Turkey will match all armament efforts of the Greek side. The declaration also repeats opposition to Cyprus' EU membership before Ankara joins the European Union.

This came as a signal of Turkey's unwavering support to the TRNC, right after it concluded a customs union deal with the European Union. Baykal, speaking to the private television channel ATV, said that the joint declaration had been ready for a long time but kept quiet until the Turco-EU customs union was signed.

A visibly joyous Denktas told reporters following the announcement of the joint declaration at a press conference after the Turkey-TRNC summit that this was "the best New Year's present they could have received." "Some issues should have to cease being used for domestic propaganda," Baykal said, adding that people who knew their job and their responsibilities were in charge.

"The president can, without any doubt, warn the Foreign Ministry on an issue of national importance, such as the Cyprus question," Baykal said. "However, this was not the case. The government does not need to be warned on the Cyprus question." The customs union should never be used for domestic political consumption, according to Baykal.

"For us, the customs union is a phrase. It is neither an economic accord nor an end in itself. The new government should take this issue further, rather than freeze it or back down from it." Baykal said that 1995 had been an important time in the Bosnian crisis, and Turkey, regarded by some as "the sick man of Europe," was taking an important role for the implementation of peace.

"My hope is to make use of 1996 well. If we can do that, we can take important foreign policy steps in 1996," Baykal said.

[04] Turkey decrees new legislation to match with EU customs pact

ANKARA- Turkey enacted on the last day of 1995 a set of fresh legislation to harmonize foreign trade rules with those of the 15 nations of the European Union as part of a historic customs alliance which takes effect today.

A Cabinet decree published in the Official Gazette at the weekend formally harmonized foreign trade policies. The decree said Turkey has adopted the EU's common external trade policy.

The new customs tariffs and duties, equivalent with those of the EU, become effective Jan. 1, 1996.

The new import regime, a document of 828 pages lowers the average customs protection against industrial imports from third countries from 10.97 percent to 5.8 percent.

Turkey has promised to have fully aligned itself after five years with the EU's policy on trade preferences.

Another decree, published subsequently, removed all customs taxes and tariffs imposed on imports of industrial goods from the EU. These average 14 percent, but peak in certain sectors at between 20 and 40 percent.

The European Commission estimates that this will lead to a doubling of EU exports to Turkey over the next five years. With the notable exception of textiles, the EU has already done away with most customs duties and quotas on industrial imports from Turkey.

Ankara has also revised its foreign trade rules concerning the agriculture sector in line with its commitments to the General Agreement on Tariffs and Trade (GATT).

Both sides will work toward free trade in agricultural products by the year 2005, with negotiations of specific mutual concessions to be undertaken in the meanwhile.

Turkey's average protection against all imports, including farm, from the European Free Trade Area (EFTA) stands at 14.4 percent and from the others at 18.4 percent.

To complete the customs union agreement, Turkey has undertaken to abide by the EU's textile policy in its entirety.

It has promised to maintain customs tariffs on cars with engines larger than 3 liters above those prevailing in the EU's Common Customs Tariff. It has also agreed to co-operate in devising a statistical monitoring system for imports of Japanese cars and, where necessary, those produced in Turkey.

Turkey has also promised to bring its copyright laws and patents into line with rules in the EU, and specifically to accelerate implementation of the Uruguay Round rules on patents for pharmaceutical processes and products to Jan. 1, 1999 from the years 2000 and 2005 respectively.

Ankara has agreed to align its laws fully with EU legislation and to set up an independent enforcement agency.

Similarly, Turkey has agreed to open negotiations on free trade in products coming under the auspices of the European Coal and Steel Community.

In one sentence, the analysts agree, the alliance should mean less revenue but more investment.

The trade pact may cut Turkey's revenues in import duties and shake some Turkish sectors, but officials hope it will also spark new foreign investments in the country. "We hear that some Japanese and Koreans firms, like Daewoo, are preparing for direct investments in Turkey. Such plans become more and more popular as we near the customs union," said an official from the Treasury's foreign capital division.

Officials hope Europeans will invest more in Turkey where the labour costs are far lower than Europe. They say Turkey, with 60 million consumers, is also an ideal base to exploit business opportunities in the nearby markets in Central Asia, the Caucasus, the Black Sea and Middle East.

The EU, Turkey's top trade partner accounting for about half of its imports and exports, will make budgetary resources of 375 million European Currency Units (Ecu) ($487 million) available over a five-year period.

Turkey will also be given more access to the European Investment Bank funds made available under the new Mediterranean policy and new bank loans to improve the competitiveness of the Turkish economy. The EU may also grant exceptional medium-term macro economic financial assistance at Turkey's request.

In total, Turkey hopes to get up to $2.5 billion Ecus ($3.2 billion) in loans and assistance from the EU sources by 2001.

The Turkish government has already drafted a bill to impose special consumption taxes on tobacco, cars, petrol, alcoholic drinks and some other goods as part of its efforts to ease the financial burden of the trade pact.

[05] Customs union will reshape Turkey's economy

• "Competition will take place on company and technology levels."
• "Companies that have foreign partners are financially stronger than those without. They are audited, more disciplined and more cautious."
• Turkey's state enterprises will be the hardest hit from an influx of western European products.
• "If ten percent of these secondhand automobiles were to enter the Turkish market -- 700,000 cars a year -- after the customs union, our automobile industry would collapse."

Turkish Daily News

ISTANBUL- When Turkey enters a customs union with the European Union on January 1, 1996, profound changes will take place in its economy.

Designed to integrate Turkey with the European economy, the customs union culminates a patient, methodical 35-year drive by Turks to be part of the West, and sets the stage for possible full membership in the EU, the world's biggest single market.

The economic pact will throw open the country's huge market of 63 million people to European products, and encourage American and Japanese industrial products and investments. It will also facilitate the flow of goods through Turkey between EU and central Asia, a vast area stretching from the Adriatic coast to the Chinese border.

Turkey's economic and political influence in the region, which includes five Turkic nations -- Azerbaijan, Kazakhstan, Uzbekistan, Turkmenistan and Kyrgyzstan, has been growing since the breakup of the Soviet Union. Turkish investors, exporters and contractors are among the most active and well-established businessmen in the area.

The customs union will also give Turkish companies and foreign firms with investments in Turkey an edge in exporting to the EU, as opposed to non-EU (i.e. most eastern European, American and Asian) nations.

Under the customs union, Turkey will dismantle all trade barriers, including duties and import taxes, against European industrial products. It will also apply the lower EU tariffs against products from third countries and introduce quotas.

In a compliance move that will greatly benefit Turkish domestic industry as well as lure foreign investment much- needed legislation protecting intellectual property rights, copyrights and patents according to international standards has been enacted.

Slim pickings

had sunk $7.783 billion in direct foreign investments in Turkey, a trifling sum compared to China, which attracted $34 billion in foreign capital investments in 1994 alone.

Although Turkey has been virtually compliant with EU tariffs in most industries for some time, with the signing of the customs union the EU will lift all quotas against Turkey's giant clothing and textiles industry and provide economic aid to its weaker industries.

Removal of the protective shield will force Turkey's industries to manufacture better quality products at lower cost. Many Turkish industries, facing chronic weaknesses in technology, finances and productive capacities, will undergo painful restructuring, and the survival of the heavily- subsidized state industries will be precarious.

"Competition will take place on company and technology levels," says Orhan Beskok, head of the economic analysis department of the Industrial Development Bank of Turkey.

Turkish firms that have existing alliances with foreign companies will be more competitive, bankers agreed. "Companies that have foreign partners are stronger financially than those without," explained Musa Erden, deputy general manager of the Ottoman Bank. "They are audited, more disciplined and more cautious." Foreign investment is expected to pour into many sectors of Turkey's economy, including textiles, processed food, computers, automobiles, electronics, telecommunications and pharmaceuticals, eventually creating thousands of jobs.

Imported industrial raw materials and machinery will become cheaper, as will the availability of lower cost bank funding.

Here is a look at how the various industrial sectors of Turkey's economy will fare under the customs union:

Textiles

Turkey's textiles industry is unquestionably the strongest sector of the economy. With 836,655 tons of cotton output in 1995, Turkey ranks fifth in the world and first in Europe in cotton production, according to Taris, an Izmir- based agricultural cooperative.

Upon completion of the massive Southeast Anatolian Development Project (GAP), Turkey's cotton production will double, and according to some forecasts may increase fourfold over the next ten years.

Turkey's huge cotton production and proximity to the world's largest textiles market -- the EU -- gives it an edge over textiles rivals China, India and Pakistan. According to the Clothing Manufacturers Association of Turkey, by the year 2000 Turkish clothing and textiles exports to the EU could triple to $20 billion.

Investments totaling $25 billion are being made in 300 new Turkish textiles and clothing factories, the Ekonomist magazine reported, and at the Milan textiles machinery fair ITMA in October, Turkish companies placed orders for $3.5 billion of new textiles and clothing machinery, the largest from any single country.

Many of the world's largest yarn, synthetic yarn, fabric, apparel and carpet companies already exist in Turkey, and are expected to benefit from the coming boom. "Turkey's future is in clothing and textiles," said Okan Oguz, president of the Exporters Assembly of Turkey.

Some European and American firms already producing in Turkey, such as America's Levi Strauss, France's L.C. Waikiki, Italy's Benetton and Germany's Cinq produce for Turkey's domestic market as well as for export.

Processed food

In recent times Turkey has been one of the seven countries in the world self- sufficient in food, and is a net exporter of processed food. At times it resorts to imports, as it has this year in wheat and sugar beets, because of bad weather and damaged crops, but advances in farming techniques and seed production are overcoming such foreign reliance.

Turkey is the world's fourth biggest producer of vegetables, ninth largest of fruits, sixth biggest of barley and seventh biggest of wheat. Its tomato and pepper production ranks second in the world after China.

Turkey is the world's fifth largest sugar beet producer, fifth largest tea producer, third biggest producer of chickpeas and second biggest producer of lentils. Its hazelnut output accounts for about 75 percent of world production. Such agricultural wealth gives Turkey a natural advantage in canned and frozen foods, pasta production, biscuit and confectionary production and brewing.

Major international food and beverage manufacturers have already invested in Turkey, including Unilever, Nestle, Kraft Jacob Suchard, Pepsico, Coca-Cola Corp. and Barilla. Others, such as U.S. cracker producer Nabisco and French dairy products manufacturer Danone, are seeking to crack the Turkish market.

Dairy products and beef production are the weak links of the processed food industry. Turkey does not produce enough of either of these to satisfy local demand, forcing imports of some dairy and beef products. French, Danish and Dutch cheese and butter products are being imported, and with passage of the customs union, imports of dairy products will increase.

Beef is imported mainly from Romania and neighboring Bulgaria. Improving Turkey's animal husbandry and bolstering beef and dairy production will be high on the agenda of the new government.

Electronics

Turkey's nascent electronics industry is likely to expand under the customs union, experts say. The industry already attracts some of the best minds of Turkey, producing a wide range of products from CD-ROMs and television sets to military electronic equipment and refrigerators.

"The electronics industry will be able to compete and thrive, especially in consumer electronics, such as television production," notes Lutfi Yenel, general manager of Alcatel Teletas Telekomunikasyon Endustri Ticaret A.S., a large telecommunications and electronics manufacturer.

But he warned that Turkey will have a hard time competing in household appliances, such as washing machines and dish washers.

Many Turkish firms will seek marriages with their foreign rivals to survive. Turkey's Profilo Holding recently sold its majority stake in Peg Profilo, a household appliances producer, to Germany's Bosch- Siemens. Arcelik, Turkey's largest manufacturer of refrigerators, is also said to be seeking to merge with a big European or American group.

Murad Kuran, a leading stock broker, noted that Turkey's low labor costs makes it a "manufacturing paradise" for foreign manufacturers in labor- intensive industries, such as electronics and automobiles.

Automotive industry

The automotive industry is rapidly recovering from last year's economic slump, the worst in Turkey since the collapse of the Ottoman empire, and it is currently drawing the largest amounts of foreign investment in the country aimed at buttressing the industry with new technology and boosting capacities, as cheaper imports are expected to flood the market after January 1.

Turkey manufactures a wide range of cars, buses, trucks, tractors and other commercial, construction and farm vehicles, as well as tires and spare parts. Renault, Fiat, Toyota, General Motors, Ford, Mercedes, BMC, Bridgestone and Goodyear currently operate in Turkey.

The Turkish automobile market is expected to grow significantly in the coming years. Per capita automobile ownership in Turkey is among the lowest in Europe. About 45 people out of 1,000 own cars in Turkey, compared to 450 per 1,000 in Germany.

By the year 2000 Turkey is projected to become Europe's sixth largest and the world's ninth biggest automotive producer with a capacity of one million units.

Japan's Toyota, which opened a $400 million plant in western Turkey in 1994, and Korea's Hyundai, which is building an automobile plant in Izmit, east of Istanbul, are planning to export their cars to the Balkans, Russia and the Turkish republics of the former Soviet Caucasus and Central Asia in addition to meeting growing Turkish domestic demand.

The greatest nightmare the industry faces after January 1 is the possibility of hundreds of thousands of secondhand cars flooding the market. Ali Tigrel, former government coordinator of Turkey's relations with the European Union, said the world's secondhand automobile market is about 7 million cars per year.

"If ten percent of these were to enter the Turkish market, our automobile industry would collapse," Tigrel warned.

Parts manufacturers look strong, supplying producers not only in Turkey but overseas, as part of nation's role in the globalization process. Major foreign producers with investments in Turkey include Robert Bosch, Mahle, Valeo, Bendix and Rockwell.

Iron and steel

Turkey's iron and steel industry has become one of the driving forces of the economy, and the customs union will handsomely reward those producers prescient enough to have retooled their manufacturing with the most advanced technology.

Many say the newly- privatized Karabuk steel mill, still using 1930's technology, probably won't survive, and Isdemir, one of Turkey's biggest money- losing state enterprises, will have to slash its work force of 12,710 people, and be privatized to stay afloat.

The nation is Europe's eighth and the world's 15th biggest manufacturer of steel. In 1994 it produced 12 million tons of crude steel, 76 percent of which was in "long products".

The steel industry is the second largest exporter in Turkey after textiles. In 1994 it earned $1.9 billion, the bulk of which went to the rapidly- developing Far East nations. It spent a little under a million dollars on iron and steel imports in 1994, down 68 percent from 1993.

Only Erdemir, an integrated steel mill which is 51 percent owned by the government, and the small Borcelik plant, owned by the Borusan group, manufacture flat products. The rest of Turkey's 22 steel mills, 17 of which are privately owned, turn out long products.

Cement industry

With low labor costs and weak environmental laws, Turkey's huge cement industry, one of the world's largest, is likely to thrive with foreign investment after January 1.

Already France's La Farge Copee and Ciment Francais are investing. On December 8 Belgium's CBR, a member of the Heidelberger Zement Group, acquired Canakkale Cimento Sanayii, one of Turkey's biggest cement plants, from the Cukurova Group for $264 million.

Currently Turkey has 48 cement plants, controlled by 23 separate, private groups. Expected production for 1995 was 34 million tons, up six percent from 1994.

About 29 million tons went to domestic consumption and 5 million to export, earning $150 million in 1994.

Ceramics

The ceramics industry is one of Turkey's most competitive due to sagacious technological upgrading and capacity increases.

But the industry's healthy profit margin, brokers predict, will shrink after January 1.

"Although the sector is strong enough to compete with its foreign counterparts, the approaching customs union may squeeze profit margins," a report of Ekinciler Investment and Securities predicted. "Abolishing barriers will naturally force Turkish ceramic producers to reduce their prices." Energy costs must also be reduced from their current rate of nearly 60 percent higher than in Europe.

Turkey produces floor and wall tiles, porcelain and ceramic bathroom sinks, toilets, and bath tubs and accessories.

Turkey is the world's seventh biggest tile producer and sixth largest exporter, with a 2.9 percent share in the world market.

Italy controls 19.7 percent of production.

In 1994 Turkey had production capacity of 90 million square meters of ceramic tile and 12 tile and porcelain manufacturers.

Its biggest ceramics manufacturer is the Canakkale Bodur group, which controls 39.6 percent of domestic production. Ege Seramik, a major exporter, ranks second, controlling 20 percent of local manufacturing.

Turkey had an estimated $283 million in ceramics exports in 1994 mostly in tiles, according to the State Planning Organization (DPT).

Glass industry

Dominated by the huge Sisecam group, the world's tenth biggest glass producer, Turkey's glass industry is also expected to weather the competition, though smaller producers may be forced to merge to survive.

Sisecam produces 35 product lines, including flat window pane glass, glass containers, glassware, fiberglass, soda ash and sodium silicate for industrial consumption. Automobile window glass, television screens, glass wool (an insulating material), are also produced in Turkey.

The greatest danger to the domestic glass industry will come from increased imports from eastern Europe, Russia and the former Soviet countries where glass prices are much lower than in Turkey.

Sisecam's president, Adnan Caglayan, has frequently urged the government to crack down on glass import dumping from third countries.

Pulp and paper

The competition from the customs union is likely to hurt the gigantic state pulp and paper concern SEKA, which has seven factories and controls about 40 percent of Turkey's production, experts said. SEKA turns out paper, cardboard, kraft paper, newsprint and cigarette paper.

SEKA's outdated technology and lack of sufficient pollution controls are liabilities. Its plant in Izmit has been one of the most notorious polluters of the Sea of Marmara.

Turkey's 14 private manufacturers produce corrugated paper and coated cardboard, printing paper, tissue paper, writing and wrapping paper.

The country produced 988,100 tons of paper in 1993, according to the Ministry of Industry and Trade. Most of Turkey's newsprint is imported from Russia and the Scandinavian countries, particularly Finland.

Chemical Products and Oil Refining

Small and undercapitalized Turkish chemical production firms are being swept out of the market by large multinationals, which have been investing heavily in Turkey ahead of the customs union, mainly in detergents, pharmaceuticals, soap, toothpaste and other products.

Unilever, Pfizer, Wyeth Laboratories, Henkel, Hoechst, Proctor and Gamble, and Bayer are already active in Turkey.

Many multinationals such as Colgate- Palmolive have joint ventures with Turkish firms.

Turkey's Tupras, the state oil refinery, is investing heavily in new technology, building hydrocrackers at two of its refineries to convert fuel oil into diesel and other high- demand products, and is unlikely to be hurt by the customs union.

Raw material imports will cost less and benefit fertilizer production. Eight firms produce fertilizer in Turkey.

The customs union is most likely to adversely affect Petkim, a giant government- controlled producer of basic chemicals, plastics and petrochemicals. One of Turkey's largest export companies, Petkim had exports of $163 million on total sales of $663 million in 1994, its first year of profitability since the Gulf War.

Low-cost petrochemicals from the Commonwealth of Independent States (CIS) are likely to erode Petkim's profit margin, and the firm may have to shut down its outdated Izmit refinery to survive. [end]