TURKEY COUNTS THE COST.The economic consequences of be August earthquake are only just emerging. Jon Gorvett reports from Istanbul.
While it is impossible to quantify the human costs of the earthquake that devastated dev·as·tate
tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates
1. To lay waste; destroy.
2. To overwhelm; confound; stun: was devastated by the rude remark. north-western Turkey on 17 August, the degree of damage the disaster has inflicted on Turkey's economy is now being assessed by both Turkish and international authorities.
The picture that emerges, as with much else regarding the tragedy, is one of major disruption and dislocation dislocation, displacement of a body part, usually a bone. When a bone is dislocated, the ends of opposing bones are usually forced out of connection with one another. In the process, bruising of tissues and tearing of ligaments may occur. , the effects of which are likely to be far reaching.
Estimates of the damage vary, with the World Bank putting the cost at $6 billion while the Turkish State Planning Authority (DPT) puts the figure at between $9-13 billion. State Minister Recip Onal explains that the discrepancy is due to different methods of calculation, dependent on estimates of lost output. This is undoubtedly considerable, as the earthquake hit Turkey's most industrialised Adj. 1. industrialised - made industrial; converted to industrialism; "industrialized areas"
industrial - having highly developed industries; "the industrial revolution"; "an industrial nation" zone -- the Marmara region. The region includes not only the quake-hit shipping, automotive, petroleum products and manufacturing hubs of Izmit and Adapazar, but also Istanbul, and accounts for some 35 per cent of the entire country's economic production. Turkish Treasury Undersecretary Selcuk Demiralp says that the country lost 1.5 per cent of its national output as a result of the earthquake.
In addition, the head of the IMF's Turkey desk, Carlo Cotarelli, said after meeting government officials in Ankara in September that the earthquake would have a significant effect on Turkey's growth potential, already in decline following years of eight per cent expansion in the early and mid-90s. Last year saw this growth falling foul of recession due to the Far Eastern and Russian economic crises, with zero growth registered in the last quarter of 1998.
The scale of lost production also emerges from the statistics regarding the actual physical damage to factories and workplaces. The Prime Ministry Crisis Centre, set up following the quake to coordinate the rescue and relief operation, which was widely criticised at the time for being in crisis itself, says that in the disaster zone, 10,901 workplaces either collapsed or were heavily damaged, while 9,927 workplaces were moderately damaged and 9,712 more were slightly damaged. Loss of manpower has also hit production: some 16,000 people were killed and many thousands more injured in·jure
tr.v. in·jured, in·jur·ing, in·jures
1. To cause physical harm to; hurt.
2. To cause damage to; impair.
3. according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the latest government figures, while UN estimates put the toll at around 30,000. And a recent report by the independent consultancy IBS IBS Irritable bowel syndrome, see there indicated that the figure for people leaving the earthquake zone to live elsewhere could be as high as 28 per cent.
This loss of personnel is highly damaging for the region's industry. Ercan Tezer, the secretary general of the Turkish Automotive Industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. Association (OSD (1) (On-Screen Display) An on-screen control panel for adjusting monitors and TVs. The OSD is used for contrast, brightness, horizontal and vertical positioning and other monitor adjustments. ), said: "Many of our personnel who emerged from the earthquake alive and uninjured have either lost their loved ones loved ones npl → seres mpl queridos
loved ones npl → proches mpl et amis chers
loved ones love npl or suffered the loss of their property ... The loss of manpower and lack of morale are quite prevalent. It is also expected that experienced personnel will move to other parts of the country."
The automotive sector was well established in the quake zone, with some 90 percent of Turkey's total automotive output originating in the region. In the medium term, the automotive sector will sustain the greatest damage from the earthquake, compared to other sectors, Tezer claims. His association is pressing the government for relief in the form of VAT and tax breaks for employees affected by the disaster. Automotives were already in trouble in Turkey, with demand declining due to the general recession and declining capacity utilisation rates. The situation was so bad that, combined with the effects of the earthquake, Tezer claims production may drop "below feasible levels".
Many other sectors are also badly affected. Cahit Normer of the Turkish Insurance and Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Companies Union says total property damage caused in the quake has been estimated by insurers at $700-750 million, and that Turkish companies This is a list of companies from Turkey.
Tourism, in the past another major foreign currency earner for Turkey, has also been badly hit -- although it too was in trouble before the quake due to adverse publicity regarding Turkey following the detention of Kurdish rebel leader Abdullah Ocalan. "We estimate that after the 17 August quake ..., nearly 150,000 foreigners Foreigners
the condition of being an alien.
Law. the seizure of foreign subjects to enforce a claim for justice or other right against their nation.
Rare. decided not to visit Turkey," says Turkish Travel Agencies Union (TURSAB) chairman Talha Camas. A report from his organisation puts the loss from cancelled conventions alone at $65 million, with the industry as a whole facing an estimated $173 million deficit for 1999.
State Minister Recip Onal admits that the state budget for 1999 had "no provisions" for dealing with a disaster of this magnitude and that "costs cannot be absorbed through an additional budget". The government is attempting to introduce an earthquake tax and to increase charges for government-controlled services. Yet Turkey has a notoriously narrow tax base, with evasion endemic. Tackling the crisis is likely to have to involve a mixture of aid and loans.
For the first of these, after visiting the earthquake zone in late September, the IMF IMF
See: International Monetary Fund
See International Monetary Fund (IMF). recommended the largest ever emergency aid loan for Turkey -- $490 million. A total of around $4 billion has so far been pledged or received in terms of aid or loans.
Around $1 billion has also been earmarked for quake relief from the World Bank. The Bank's chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the responsible for Turkey, James Parks James Parks was a freed slave who is prominently buried at Arlington National Cemetery. He died at Freedman's Village in Arlington, Virginia. Biography
The first graves in Arlington National Cemetery were dug by James Parks, a former Arlington Estate slave. , says: "Out of the $1.05 billion, $300 million will be lent by reallocating funds remaining from previous projects.
"These funds will be used to construct health centres and schools in the quake-hit region. The remaining $750 million will be used for reconstruction and infrastructure activities in the quake region and for the needy."
With the IBS report indicating that only 17 per cent of the buildings in the quake zone are structurally sound, reconstruction is an immense and urgent task -- subsequent tremors and after shocks from the quake have already added to the death toll as buildings that withstood the 17 August shock have subsequently collapsed.
Yet the IMF remains officially optimistic op·ti·mist
1. One who usually expects a favorable outcome.
2. A believer in philosophical optimism.
op on Turkey's chances of recovering from the economic effects of the quake -- provided the government follows its recommendations for wider structural reforms. In particular, the IMF and the World Bank have pressed Turkey to commit itself to reforming its banking and agricultural sectors. In the latter case, agricultural subsidies agricultural subsidies, financial assistance to farmers through government-sponsored price-support programs. Beginning in the 1930s most industrialized countries developed agricultural price-support policies to reduce the volatility of prices for farm products and to are the target, as currently prices for agricultural commodities are fixed by the government, with the level increasing often as a method of increasing support for the administration amongst farmers. As a result, official prices are often way above market levels and there is a considerable drain on public finance in supporting them.
Onal also puts a brave face on things, saying that Turkey's year 2000 projections have not changed, the country's privatisation Noun 1. privatisation - changing something from state to private ownership or control
denationalisation, denationalization, privatization
social control - control exerted (actively or passively) by group action programme will continue as planned, and a reform of the agricultural sector, including the pinning of prices to world market levels, will be a cornerstone of the government's future programme. With such commitments, the chances of Turkey obtaining a stand-by loan agreement from the IMF are much improved, and with that its chances of being able to raise the money it needs abroad.
Yet to some extent too the economic effects of the quake may be shaped by factors on a much more local level. With reconstruction contracts already being handed out -- often to the contractors who local people blame for building the shoddy shod·dy
adj. shod·di·er, shod·di·est
1. Made of or containing inferior material.
a. Of poor quality or craft.
b. Rundown; shabby.
3. apartment blocks that collapsed in the first place -- and widespread fears that aid to central government will not be distributed fairly or properly, how the recovery will be managed on the ground still remains open to question.