USIA - Text: Deputy A/S Larson on U.S.-Turkey Economic Cooperation, 97-02-20

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TEXT: DEPUTY A/S LARSON ON U.S.-TURKEY ECONOMIC COOPERATION

(Speech 2/20 at American-Turkish Council conference) (1750)

Speaking at the annual conference of the American-Turkish Council February 20, Larson praised Turkey's "commitment to tackling its economic problems, beginning with deficit reduction and an ambitious program to privatize state-owned enterprises and assets."

The United States urges a continuation of these policies, he said, adding that "resolve is vital because the economic reform path will require hard choices, vigorous leadership, and commitment."

Turkey needs "clear-eyed realism" in solving its energy problem, Larson said. "It must decide whether it dares to put its energy future in the hands of countries that do not share Turkey's respect for democratic traditions, that use the proceeds of energy sales to foster terrorism -- a plague that has afflicted both Turkey and the United States -- that seek to acquire weapons of mass destruction, and that foment regional instability.

"There are alternatives. Pursued with resolve, these alternatives could meet Turkey's needs in a more secure and cost-effective fashion. The United States is prepared to work with Turkey to advance its energy security."

Following is the prepared text of Larson's speech:

(Note: In this text, "billion" equals 1,000 million.)

(Begin text)

The United States values highly its relationship with Turkey -- including Turkey's role as a NATO ally and reliable partner among the world's democracies. Increasingly, our relationship is becoming deeper and more complex as we build on our traditional security relationship by expanding economic cooperation. We value the enhanced economic dialogue that has been under way since the October Joint Economic Commission meeting.

To reach its full potential, our economic and commercial partnership will need to be based on the same principles that have served us so well in the security arena: respect, realism, and resolve. Each side must respect the roles, capabilities, and values of the other. Each side must base its participation in the partnership on a clear appreciation of the economic and political reality of the other. And each side must summon the resolve to make the partnership work, despite complications that are sure to arise.

In all this, the business community has an indispensable leadership role to play. Only you can provide the drive, capital, and technology needed to create jobs and growth.

Economic Reform and Privatization

We hope the government continues to pursue economic reform with realism and resolve. Realism is important; reform is essential for Turkey's security, and an effective, clear-eyed strategy will be necessary. Resolve is vital because the economic reform path will require hard choices, vigorous leadership, and commitment.

Turkey is rightly proud of its self-reliance; at the same time, a series of Turkish leaders have understood that Turkey's participation in an international organization like NATO advances Turkey's independence and security. International cooperation can be as important in economic policy as it is in the security arena. In this regard, should Turkey's government decide that its economic reform objectives could be advanced through closer cooperation with international financial Institutions, the United States would lend its full support.

Trade and Investment

Turkey has many important new commercial opportunities. The United States, for example, has seen its imports grow by 56 percent since 1989. We are the largest importing nation in the world. I believe the American-Turkish Council can play a crucial role in helping Turkey develop a larger presence in the U.S. market. Your leadership is vital in developing business relationships. The Council can also play a role in advising our two governments on private sector priorities as we seek to remove barriers to trade, reduce costs to business and, over time, harmonize standards. I also believe we should explore the possibility of deepening bilateral commercial ties by negotiating an "open skies" civil aviation agreement.

Not surprisingly, given its geography and history, Turkey's trade with the EU is large. The United States actively supported the establishment of a customs union between the European Union and Turkey. This new relationship provides important opportunities for Turkish businesses. Among other things, it should give Turkey a further basis for recruiting foreign direct investment.

In the broader world market, Turkey has still further opportunities. The United States has led the members of the World Trade Organization to conclude two major agreements to ensure that the information superhighway reaches all corners of the world. Last December in Singapore, there was a framework agreement on information technology that will eliminate tariffs on over $500 billion in products. Last week in Geneva, there was an agreement to open the international telecommunication services market to full competition. In the OECD, we are negotiating an investment agreement that will establish a high standard for investment liberalization and protection. I hope Turkish business will explore fully how these agreements may open new opportunities for Turkey to plug into the emerging global economy.

In my opinion, realism demands that the Turkish government and business community wholeheartedly embrace globalization and integration in the international economy. Experience around the world has shown convincingly that this is the path of progress. In assessing your opportunities for a growing presence in the U.S. market, look at the import sectors that are growing and ones where Turkey has a comparative advantage.

Energy

Americans are no strangers to the political and economic dilemma of energy import dependence. We learned the hard way in the 1970s that excessive dependence on imported energy could damage our economy, impinge on our foreign policy, and threaten our security. So when we discuss energy security with Turkey, we do so with great respect for the challenges that it faces and the pressures it confronts.

Turkey must confront its energy situation with clear-eyed realism. It must decide whether it dares to put its energy future in the hands of countries that do not share Turkey's respect for democratic traditions, that use the proceeds of energy sales to foster terrorism -- a plague that has afflicted both Turkey and the United States -- that seek to acquire weapons of mass destruction, and that foment regional instability.

There are alternatives. Pursued with resolve, these alternatives could meet Turkey's needs in a more secure and cost-effective fashion. The United States is prepared to work with Turkey to advance its energy security:

• Turkey can vigorously re-engage in the development of Caspian Sea energy. The Baku-Ceyhan pipeline enjoys solid support as an outlet, but it requires constant advocacy as it competes with alternatives.
• A companion line to carry gas from Azerbaijan, and eventually from Turkmenistan and Kazakstan, would appear to be a natural adjunct to the oil line. We would like to pursue this option with the Turkish government and with industry.
• We are prepared to assist Turkey in using its existing energy resources more efficiently. The United States Department of Energy will start work this year to help Turkey achieve greater efficiency in the production and transmission of energy.
• We believe Western companies can make a major contribution to the expansion of Turkey's electric power sector through private investment. Turkey has taken some initial steps, but much more needs to be done -- speedier approvals, clarification of investors' rights, and further privatization. While government ultimately is responsible for adopting the policies to attract investment, the business community can play an important role identifying the key issues. That is why Under Secretary Dogan (of the Turkish Ministry of Energy and Natural Resources) and I co- chaired a meeting yesterday with representatives of the oil and gas industry.
• We believe Western companies can supply LNG (liquified natural gas) to diversify Turkey's supply mix. In this regard, Mobil has proposed building two new regasification plants and an LNG fired-powered plant at Izmir and Iskenderun. Amoco is pursuing a combined LNG regasification and power generation project in the Izmir region. Other Western companies have asked to build three LNG terminals worth $2.4 billion. These Western companies and others will source their LNG from production facilities in Yemen, in Qatar, in Egypt, in Trinidad, in Algeria, and others.

Conclusion

The United States and Turkey can be trusted partners in the economic arena, just as we continue to be on security questions. Our security partnership has taught the importance of respect, realism, and resolve. Let's apply these same principles to our economic partnership.

(End text)

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