Minister's fall drives Turkish rebound

Turk Telekom and the military share the same network

The Turkish lira rebounded strongly and the stock market recovered 7% on Wednesday after a government minister opposed to economic restructuring quit.

The International Monetary Fund (IMF), which has demanded the restructuring of Turkey's economy, had baulked at releasing $3.2bn in loans while communications minister Enis Oksuz remained in his post.

Opposed privatisation for national security reasons

As communications minister, Mr Oksuz had reluctantly implemented the IMF-sponsored privatisation of Turk Telekom over fears it could compromise national security.

But for foreign investors and lenders, he became a symbol of nationalist scepticism directed toward the IMF's economic plans.

Mr Oksuz quit on Tuesday night.

IMF plans

The IMF has demanded the speedy privatisation of state-owned industries, including Turk Telekom, in return for loans to prop up Turkey's economy.

The IMF and World Bank delayed for 10 days some $3.2bn in aid when Telekom appointed a board that included military chiefs but no-one with private sector experience.

The financial markets greeted Mr Oksuz's departure positively.

The lira strengthened against the dollar at 1,395,000, up from Tuesday's lows of 1,500,000.

The stock market, which was 4% down on Tuesday, rose 7.2% on Wednesday morning.

Investors have punished both the lira, which has lost half its value since February, and the stock market because the Turkish government has not implemented the IMF's restructuring quickly enough.

Mr Oksuz has been at the centre of several other disputes over IMF plans and has criticised economy minister Kemal Dervis who organised the loans.

This is not the first IMF-related resignation. In May, Turkey's privatisation minister, Yuksel Yalova, quit after raising doubts over other IMF-sponsored plans.

Military concerns

For the Turkish Armed Forces (TAF), the privatisation has failed to address concerns about national security.

Turkey's military and civil communications networks are heavily interdependent to provide national coverage, and TAF does not want to cede control of the landlines and satellite systems to international bankers.

Turk Telekom makes use of the massive fibre-optic network established by the military, at a cost of about $1bn, while the military also utilises the much smaller network built by Turk Telekom.

In May, Mr Oksuz was instrumental in halting the planned sale of over 45% of Turk Telekom and agreed to retain a 1% "golden" share of the landline monopoly to help ease some of those fears.