Tuesday, August 24, 1999 Published at 19:40 GMT 20:40 UK
Business: The Economy
Turkey's rocky road to recovery
Up in smoke: the Tupras refinery was due to be sold off
By BBC News Online's Dominic Casciani
The costs of rebuilding Turkey after its devastating earthquake could be 16 times higher than the reconstruction bill for Kosovo, according to the country's business leaders.
The World Bank estimates that the reconstruction of Kosovo following the conflict earlier this year will cost a mere $1.23bn by comparison.
"The disaster will inevitably affect the Turkish economy which had just started to recover from a severe recession," said Tusiad.
Warning that the economy could now be losing $300m a day, the organisation appealed to the international community to swiftly come to Turkey's aid.
Rapid recovery forecast
However, the long-term damage to the economy should not be too serious, according to the international credit rating agency, Fitch.
It said that, while Turkey could see a 2% fall in gross national product this year as a result of the quake, it should make a rapid recovery.
A spokesman for Fitch said: "There will undoubtedly be significant short-term effects on output, the fiscal position and the balance of payments.
"However, these seem unlikely to be sharp enough or prolonged enough to affect Turkey's medium-term economic prospects or its creditworthiness."
The agency said there could even be an economic "silver lining" for Turkey, in the form of international aid and a boost in demand for new buildings, infrastructure and consumer goods from next year.
But there is no escaping - or underestimating - the short-term effects. The area of north-west Turkey struck by last week's earthquake is the country's industrial heartland.
The most critical issue for the government is how it will repair the infrastructure of a region which provides 55% of its total tax revenues.
Fugen Camlidere of the Istanbul Chamber of Commerce told BBC News Online that while many large manufacturers had survived the earthquake, they had to act to save their suppliers.
"The motorway between Istanbul and Bolu and roads passing north to south of the Izmit Gulf are damaged.
"Communications, sewage, water and electricity systems have been hit. It will take months to repair.
"But business leaders are busy providing assistance to those stricken by the disaster. Only in a week or so will ideas and decisions emerge."
The question of privatisation
The most obvious symbol of the economic devastation has been the destruction of the country's largest oil refinery at Izmit, a loss which has put paid to plans to make it the $1bn centre of next year's privatisation programme.
"Some of the enterprises that were slated for privatisation will have to be delayed until there is reconstruction to the actual plant," said Amer Bisat of the US investment firm Salomon Smith Barney.
"There is, however, the question about the privatisation stance itself.
"Will the government have the political stamina to push through what is obviously a politically difficult decision to diversify state-owned assets at a time of national emergency?
"That is still an open question."
Ankara recently secured a $5bn International Monetary Fund loan, dependent on economic restructuring and radical social security and pension changes.
But the World Bank, which has contributed aid to two previous Turkish earthquakes, has said that it is ready to forward $220m in loans.
Fugen Camlidere of the ICC said: "The government will spend extra funds to cover the damage.
"But if lines of credit and concessionary facilities are extended, prices will be contained.
"The IMF sponsored reforms should still go ahead. They will help to provide sustainable growth and a competitive edge.
"The reforms are now even more vital today."
One idea being floated is the issue of one-off "earthquake bonds" but government signals appear confused.
One spokesman reportedly described the economic damage as "beyond any tragic event in the history of Turkey" while finance minister Recep Onal said that he did not believe the disaster would be an excessive burden.
"It may take some time to heal the wounds," he said.
"But as far as our macro-economic balances are concerned, any retrogression is out of the question.
"Our major loss is the valuable loss of human lives," Mr Onal added. "That will take time to replace, but we will succeed."
The Economy Contents