TURKEY - Aug. 28 - Efforts To Restore Confidence Threatened By Motorola-Telsim Dispute.

IHT report says Ankara's efforts to restore foreign investors confidence in its economy are being threatened by a dispute over a $2 bn debt owed to US wireless-technology giant Motorola Inc. by Telsim Mobil Telekomunikasyon Hizmetleri AS, Turkey's No. 2 cellular phone company. Telsim is owned by the Uzan family whose fortune has been battered by the economic problems. The loan helped Telsim buy Motorola products, but Motorola says the Turkish company has been in default since June. Motorola is getting help from the US government and former senior US officials to try to collect the debt. Marc Grossman, the US under-secretary of state for political affairs and a former ambassador to Turkey, and the US Embassy in Ankara raised the issue with Turkish government officials. An unidentified official says: "They urged the government to make sure everyone meets their contractual obligations and cautioned that the outcome could affect the way foreign investors perceive Turkey". The matter is sensitive, because Turkey is a NATO member and ally whose economy has been battered for months. The IMF and the World Bank have pledged $17 bn in emergency loans to Ankara, and the Bush administration has praised its efforts to adopt financial reforms and attract new capital from foreign investors and lenders. The steps are viewed as essential to the country's economic and political stability. But financial analysts warned that Turkey's recovery effort could be damaged if the government appeared unable to protect foreign investors in private commercial disagreement. Along with getting administration help, Motorola enlisted two former senior officials - Brent Scowcroft, the national security adviser under Pres. George Bush and chairman of the American-Turkish Council, and Mark Parris, US ambassador to Turkey until Sept. 2000 - and a prominent investigative agency, Kroll Associates. Attempts to reach Telsim executives and Uzan family members were unsuccessful. The government has not discussed the dispute officially. A senior official said the government was concerned about potential fallout among foreign investors and hoped that Telsim would begin making payments. (Telsim paid the government $500m for a cellular phone licence in 1998. Motorola and Nokia lent money to Telsim to buy mobile phones and other equipment from them. The collateral was mainly Telsim shares. Motorola's problems became public last month when the FT reported that Telsim missed a $728m payment in April. Motorola said it demanded that the entire $2 bn be repaid and Telsim refused. The US company said Telsim also had violated its contract by issuing shares that diluted Motorola's collateral from 66% of Telsim to 22%. Nokia stopped supplying equipment to Telsim after it said the company had failed to repay $240m on a $719m loan. The Uzan family's wealth was estimated at $1.6 bn by Forbes magazine this year, though many sectors in which it has interests have been hurt by the economic crisis. In addition to Telsim, the family owns banks, media properties and companies in the cement, steel, energy and construction industries. Kemal Uzan, 66, started the business in the 1950s. His two sons run parts of the empire and have reputations as big spenders, with homes, yachts and aircraft around the world. When private investigators began examining the family's assets this summer, the Uzans filed a civil suit in court. The suit demanded the detention of executives from Motorola and Nokia, saying the investigators had caused security problems for the family).