Turk Telecom faces privatisation

Turkish PM Bulent Ecevit: Determined to pass the law

By Chris Morris in Istanbul

The Turkish parliament has approved laws to privatise the state-owned telephone company, Turk Telecom, and to reform the country's troubled banking sector.

The government was determined to pass the laws in order to secure $10bn in new emergency loans.

The executive board of the International Monetary Fund will meet on Tuesday to discuss the aid package for Turkey, which is now almost certain to be approved.

There was political haggling in the Turkish parliament right until the end, and there are still reports of bitter disputes within the government about the new privatisation law and the pace of reforms demanded by the International Monetary Fund.

Ecevit's row with President Ahmet Necdet Sezer sparked a collapse in investors' confidence

Turk Telecom will be put up for sale, but a foreign investor can buy no more than 45% of the company. The Turkish state will retain a golden share to maintain its influence and reduce military concerns about the sale of what the generals see as a strategic asset.

The problem is that many analysts believe it is all rather academic.

Turkey, they believe, will not find a major foreign buyer in the telecom sector. This privatisation has been delayed for years and now is not a good time to sell.

Nevertheless, the legal framework for a sale should be enough for the IMF to aprove the release of the new loans to help Turkey stabilise its banking sector and meet its debt repayment.

Parliament has also passed a law to reform the banking system and make it easier to seize the assets of corrupt bank owners.

Sorting out the mess in the economy will cost a lot more than Turkey is going to receive from abroad. That means it needs to cut spending and increase revenue collections substantially if it is going to balance the books.

That is not good news for ordinary Turks, who have already suffered badly in the last few months. Hundreds of thousands of jobs have been lost and prices have risen dramatically, but the economic crisis is by no means over.