Address by the Prime Minister of the Republic of
Turkey to the OECD Council
(Paris, 21 October 2004)
Mr. Secretary General,
Permanent Representatives,
Ladies and Gentlemen,
Let me first convey my warmest thanks to the Secretary General for providing me with the opportunity to address this very distinguished audience. I would like to seize this opportunity to thank him again in mine name and in the name of my delegation. I would also like to take this opportunity to express my gratitude to the Permanent Representatives who are kind enough to be present here today. It is indeed a pleasure for me to address the Council of this highly respected international organisation, in which Turkey is represented as one of the founders.
One of the most outstanding features of this initial stage of the 21st century is the process of change taking place at global, regional and national levels. When we look at global trends, on the one hand, it is expected that the world population will continue to increase and that almost all of this increase will take place in less developed and developing countries. On the other hand, if we look at the issue from an economic point of view, it is evident that economic recovery and mobility will speed up on a global scale. However, we should not expect that all countries will benefit equally from this positive development. The interaction between East and West will also increase in the dynamics of globalization. At this juncture, Eurasia, which also includes Turkey, will show an even more accentuated integration.
It is obvious that globalization not only brings opportunities but also imbalances and disparities. Needless to say, the democratic and free nations and the open regimes based on the rule of law are going to be the ones, which will benefit most from this process. Turkey has made its choice long ago in this respect, and continues on her journey with determination and self-confidence. Turkey is determined to maintain this choice regardless of any kind of developments that may occur in her region or on a global scale. The main objective of our domestic and international policy is to provide our people with the highest political, economic and social standards. Turkey, with its historic record, human resources, culture, and secular and democratic regime is well able to reach this objective.
Mr. Secretary General,
Permanent Representatives,
Today, Turkey ranks among the world’s twenty biggest economies. Its GDP increased by 7.9% in 2002 and 5.9% in 2003. I am pleased to emphasise that these growth rates are among the highest recorded by the OECD countries. The performance of the Turkish economy is exceeding our targets and forecasts for 2004 as well. 13.5% economic growth rate for the first half of this year is a record setting figure. Political stability, coupled with swift and correct decision-making in economic management has generated an environment of confidence. The positive expectations strengthened and supplemented by structural reforms and the perspective of EU membership have also contributed to this environment. The trend of decline in interest rates is continuing. This environment of confidence has shown itself in the serious increases recorded in our imports and exports as well. Our foreign trade volume will exceed 150 billion US Dollars by the end of 2004, substantiating the strength of our country’s production, consumption and trade capacity. Our exports are expected to exceed 60 billion US dollars this year. This success is a result of the implementation of structural reforms, creation of a favourable environment for exporters, the introduction of reforms enhancing of stability and strategic planning of recent years.
All the necessary steps are being taken in order to maintain this dynamic process for the years ahead. Thanks to resolute policies, the long lasting problem of inflation has been brought under control. In 2003, the Turkish economy had an important opportunity to decrease inflation in a sustainable manner. Inflation on the basis of the Consumer Price Index, which was 29.7% in 2002, declined to 18.4% by the end of 2003. This figure indicates that my government has achieved a better figure than the targeted inflation rate of 20 per cent for 2003. The inflation rate, based on the Consumer Price Index, was recorded at 9% at the end of September 2004, coming down to a single digit and the lowest inflation rate in the last three decades. As a concrete result of our success in the struggle against inflation, we are introducing a redenomination of Turkish Lira by dropping 6 zeros as of January 1, 2005.
Financial discipline, by means of reaching the targeted primary surplus in the budget, is the main determinant of financial stability and economic growth. There has been no compromise on this matter and we will maintain this position. No public spending is being or will be made unless the necessary resource appropriations are made in the budget. Through establishing a healthy revenue-expenditure balance in the 2003 and 2004 budgets, we have achieved a significant decline in the ratio of the budget deficit to the Gross Domestic Product. This ratio, which was 16.5% in the year 2001, declined to 14.6% in 2002 and 11.2% in 2003. It is expected that the budget deficit will be 8% in 2004 and 6% in 2005.
The achievement in sustaining the budgetary discipline has had positive implications for all the macroeconomic indicators. My government is determined to continue comprehensive structural reforms in other important sectors such as agriculture, social security, banking, energy, and taxation. Moreover, we are continuing to work on attracting FDI and on removing any bureaucratic obstacles that may impede it.
Thanks to the “Foreign Direct Investment Law”, which came into force in 2003, the administrative and bureaucratic process has been considerably shortened. Having successfully provided a stable economic and political environment, Turkey is becoming a more attractive country for foreign investment.
Thanks to its geographical location, being situated between the energy-rich East and the developed consumer markets of the West, Turkey constitutes an energy corridor. In this context, Turkey has taken the initiative in the realization of several oil and natural gas projects. Important parts of the Baku-Tbilisi-Ceyhan Crude Oil Main Export Pipeline Project as well as the Baku-Tbilisi-Erzurum Natural Gas Pipeline Project have been completed. The Baku-Tbilisi-Ceyhan project is considered as to be the project of the century in the field of energy and the first flow of oil will reach Ceyhan on the Mediterranean in mid-2005.
Another success story of Turkey is taking place in the tourism sector. We expect the number of tourists entering Turkey will reach 17 million by the end of this year, generating a revenue of 13 billion US Dollars. This sector contributes and will further contribute to our economy in terms of both income and job creation in the future. Our aim is to make Turkey one of the top ten tourist destinations.
Mr. Secretary General,
Ambassadors,
We consider the OECD to be a leading organization providing the intellectual basis for the management of the world economy, through analytical studies on issues of global importance. We are supporting the reform process initiated within the OECD. We are also supporting the work undertaken on the future role of OECD in the global architecture as well as the work on enlargement and outreach.
We agree on the necessity of enlargement of the OECD in order to preserve its influence and relevance in the globalization process. We believe that every single application must be evaluated on its own merits according to the principles of “like-mindedness” and “mutual benefit” and that the membership should be granted once all the conditions are met. We support the idea of the creation of a Task Force which will evaluate the implications of enlargement for the OECD budget, before it actually takes place. We also attach a great deal of importance to enhancing relations with non-Member countries in the context of outreach. We believe that the work being carried out in this framework will better promote the visibility of the OECD on a global scale.
Mr. Secretary General,
Permanent Representatives,
I would like to specifically emphasise that in the reforms being carried out in Turkey, we fully benefit from the work of the OECD and especially from the best practices and the “peer-review” system. In this spirit, my government is considering, has launched or has completed a number of reviews on issues such as Combating the Offence of Bribery under the OECD Bribery Convention, education in Turkey, Turkish SMEs, competition policy in Turkey, e-government, agriculture, money laundering in the context of the Financial Action Task Force, the Istanbul metropolitan area, and also reviews on private pension funds, or on issues related to environment or health.
Another issue that I would like to give a special emphasis to is the successful completion of the periodic Turkish review of the Economic and Development Review Committee. The report will be published today. We will introduce this report to the public during the press conference that I will be shortly holding with the Secretary General. I am pleased to note that the report, which deserves to be defined as a very serious reference document, has been prepared in an objective and well-balanced manner. This report gives us encouragement in the work we are carrying out.
Another periodic review of Turkey, undertaken within the framework of the International Energy Agency, is due to be completed in 2005.
Mr. Secretary General,
Ambassadors,
As you are aware, Turkey has been hosting various OECD meetings lately. The Governing Board of the International Energy Agency met in April 2004 in Istanbul. The Second OECD Ministerial Conference on SMEs, held in Istanbul in last June, is still remembered. During the Istanbul Conference, the experts and policy makers thoroughly discussed the problems faced by this most dominant form of business organization in the world and explored avenues aiming at providing the best policies to increase their sustainability and competitiveness. Another meeting, held in Turkey just 10 days ago, was the meeting of Senior Officials from Centers of Government. The OECD Global Investment Forum meeting will also be held in Turkey in 2006. We want both the OECD Centre for Private Sector Development in Istanbul and the OECD Multilateral Tax Centre in Ankara to be more active. We are most pleased to have been able to host the Secretary General in Turkey on four occasions.
I would also like to point out that as the closest OECD country to the region, Turkey has been fully supportive of the OECD MENA project from the beginning. As you may well recall, the first meeting of this project was held in Istanbul. We believe that the OECD can play a more active role in furthering the relations between its Members and MENA countries.
We are also supportive of the OECD activities on public governance. The role of the OECD in setting the international standards to provide adequate transparency for institutions, especially for those operating in financial markets is indispensable for creating public confidence and financial stability.
Mr. Secretary General,
Permanent Representatives,
In this part of my speech, I would like to touch upon Turkey-EU relations. The steps that we are currently taking with the EU towards further integration bear a much deeper meaning than a simple partnership. We share all the common values that the EU stands for. Ownership of these values along with their institutions and rules in our country is a goal enthusiastically shared and strongly supported by our people as well. We are fully convinced of the fact that we can reach the world’s highest standards in terms of participatory democracy, pluralism, the rule of law, human rights, secularism, freedom of thought, freedom of conscience and freedom of enterprise within the framework of the EU.
As a result, we consider the full membership of our country in the EU to be our main strategic goal. Our accession process is developing in this spirit. Three important documents which will set the basis for moving toward the negotiation phase in this process were released by the European Commission on October 6. The European Commission has recommended the opening of accession negotiations in the light of the conclusions it has reached in its Progress Report. We believe that the decision, which is due to be taken by EU Council on December 17, will be a milestone not only from the perspective of Turkey-EU relations but also from that of the new world order. This critical era endured by both Europe and the world can no longer tolerate either a postponement to a later stage or the evasion of this responsibility. We do hope that our friends Members of the EU will be as conscious of this fact as our country is and will adopt an unconditional resolution guaranteeing the opening of the negotiation process and its pursuit.
I would like to underline that it had been decided at the European Council in Copenhagen in 2002, that if Turkey fulfilled the Copenhagen criteria, the negotiations will be opened without delay. At the time, the then EU-15 had endorsed these conclusions of the European Council and Turkey continued its efforts and met all its obligations in this respect. As a result, it is now for the Members of the EU to take the test. They are now to demonstrate their political will on December 17.
In this respect, we expect that the accession negotiations are launched without any delay. The actual launch of the negotiations should take place in the first months of 2005 or by July 2005 at the latest. We have taken very significant steps within the framework of the EU harmonization process in recent years. The necessary legislation needed to fulfil the political criteria set out as a precondition for the commencement of negotiations have been completed rapidly through the swift introduction of legal harmonisation package of bills to the Turkish Parliament. Of course, this process will continue during the accession negotiations. In the meantime, we have also introduced a series of economic reforms. We introduced new legislation, took necessary measures, and recorded significant progress in areas such as financial sector, public finance, improving competition in the economy, social security, taxation and agriculture.
In addition to the legislative measures taken to strengthen the independence of the Central Bank, we made legal changes to create autonomous and impartial regulatory authorities to bring transparency in the areas such as banking, telecommunications, energy and public procurement. Furthermore, having removed the monopolies on the sectors of energy, sugar, tobacco and alcoholic beverages, we established autonomous regulatory authorities to monitor activities in those markets.
We are fully aware that our economy may re-experience the past crises again if we fail to bring continuity to the acquired results and maintain effective implementation. We are also aware that further consideration and priority should be given to matters relating to the flow of foreign investment, privatization, productivity and employment. We are fully determined to continue structural reforms in the most comprehensive manner. To this end, we are currently involved in preparation of an economic program encompassing the next three years.
The breakthrough of the Turkish economy will gain further momentum upon the commencement of accession negotiations with the EU. I can assure you that when Turkey acquires full membership of the EU, the Turkish economy will further grow while being a source of richness and dynamism to the EU rather than a burden.
At the outset of my speech, I touched upon the notion of change in the world. Change brings uncertainties as well as making it difficult for nations to envisage the future clearly and make projections. We live in an era in which we are obliged to count on common wisdom and the rationality of mankind. At this point, the importance of international organisations, implementing a strong cooperation mechanism, is increasing. In this respect, I wish to give emphasis to the indispensable character of the expertise, competence and acquis of the OECD.
Turkey, being aware of the importance of international and regional cooperation, will continue to pursue a constructive foreign policy to strengthen peace and stability and to improve prosperity in its region. Our understanding of foreign policy, defined in these terms, encourages the strengthening of a culture of conciliation and compromise in our region. Our policy is based on a win-win principle. In this context, we want to develop relations between countries based on real friendship.
Thanks to its stability and model of development, the position that it enjoys in the Western world, its rich historical legacy and identity, Turkey rises as a symbol of the harmony of culture and civilisation. Turkey is aiming to reach this goal not through its economic and military power, but through its affiliation with universal values and its contribution to the interaction of these values among regions.
Mr. Secretary General,
Ladies and Gentlemen,
In concluding my remarks, I would like stress once again that I am most pleased to have had the opportunity to address you and salute all of you with respect.