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Feeling September 11's Pain in Turkey

A near halt in tourism is dealing yet another blow to the country's already-struggling economy. Social unrest could be next

Before the terrorist attacks of September 11, Turkey was on the cusp of an economic recovery -- or so many economists thought. Now, the tough times are set to continue. Tens of thousands of small companies are going out of business, and many more thousands of workers are losing their jobs. Middle-class people have been forced to withdraw their children from private schools and move into smaller apartments. Some have resorted to selling their cars in a depressed market in a desperate efforts to pay bills and cut expenses.

Turkey, now more than ever, is a key ally for the U.S. The only predominantly Muslim member of NATO, it's also one of America's staunchest supporters in the Middle East. In sharp contrast to fence-straddling Arab allies, Turkey long has allowed its Incirlik Air Force Base to be used by British and U.S. warplanes enforcing the no-fly zone over Northern Iraq and also lately as a staging area for the campaign against Afghanistan.

The first U.S. casualty was evacuated to Turkey from Uzbekistan, where he had been crushed between two army vehicles. The Turkish Parliament recently voted to allow Turkish troops to take part in the anti-terrorism campaign and to allow foreign troops to be based on its soil.

UNPRECEDENTED PLUNGE.

  Economically, though, Turkey is fragile. Like Pakistan, Uzbekistan, and other U.S. allies, Ankara may need aid -- on top of an expensive International Monetary Fund bailout already in progress. Turkey's woes show just how costly and precarious President Bush's attempts to build an anti-terrorist coalition in the Middle East may be.

The country has weathered an almost unprecedented economic plunge since financial and political crises last November and this February. The Turkish lira lost half its value, foreign investors fled, government ministers resigned one after another in corruption scandals, and the IMF anted up aid that required a program of reform and recovery in return.

Still, the Turkish economy contracted by 8.4% in the first half of 2001. Turkish authorities already have told IMF officials they may need additional financing and have suggested delaying a $5.5 billion debt repayment scheduled for early next year.

NO HOLIDAY SPIRIT.

  Before the terrorist attacks in the U.S., Kemal Dervis, who was brought in from the World Bank to direct Turkey's economy, had predicted that industry would swing into positive growth in the fourth quarter, largely because tourism remained strong. Such optimism vanished in clouds of dust and blood in New York, Washington, and Pennsylvania.

The new Ritz-Carlton Istanbul, which opened in a subdued ceremony on Oct. 6, reported a 90% drop in reservations through October and November. Now, with the strikes against Afghanistan under way, even fewer people can be expected to be planning holidays in the region. The Istanbul Stock Exchange 100 index dropped 31% in dollar terms in September. "Nothing looks good these days," lamented Exchange Chairman Osman Birsen at the Ritz opening.

Worries about social unrest are rising. The World Bank has just initiated a $500 million program designed to provide a safety net for Turkey's poorest people. Even in an affluent neighborhood on Istanbul's Asian side, along the chic shopping row of Baghdad Avenue, women clutch their handbags closer than ever as purse snatchings have become common. My Turkish mother-in-law told me of seeing a couple of young girls stealing a can of Coca-Cola from a café table as a third girl distracted the diners' attention.

FIRED BY E-MAIL.

  Analysts estimate that Turkey's unemployment rate now stands at a punishing 12% -- and is rising. A position with a foreign company no longer guarantees higher wages and job security. With top multinationals slashing employment by thousands worldwide, managers in Istanbul are being called on to cut costs.

One woman at an Internet technology firm took a day off only to have a courier show up at her home with a letter from her boss saying she was fired. A friend at an advertising agency got the bad news by e-mail. A car dealer in Istanbul reduced his staff from 120 to 60, then to 30. He would now like to cut the number in half again, but he can't afford the severance pay mandated by law. He's struggling to avoid bankruptcy.

Meanwhile, the Turkish government is looking increasingly shaky, as the three-party governing coalition's popularity has plunged. A recent poll about Prime Minister Bulent Ecevit, 76, found that 85% of those surveyed believe him to be mentally and physically unfit to serve. Ecevit, who totters in front of cameras, is obviously not well. He has held on to office throughout the year by arguing there's no one else to fill his post.

VOLATILE MIX.

  Turkey is in little danger of being taken over by Islamic radicals, as Afghanistan was. The majority of Turks love their secular republic and abhor anything like the Taliban or even more moderate Saudi-type Islamic fundamentalism. And the Turkish military has always had strong public support for opposing Islamic militants.

However, authorities fear the rising star of Tayyip Erdogan, the former Islamist mayor of Istanbul who served more than a year in jail for a speech inciting religious war against the secular state. The mix of Islam and politics has become a hot issue with Osama bin Laden taunting the U.S. from his hideout in the mountains of Central Asia.

The last Islamic party to come to power took only 20% of the votes, but that was more than any other party in Turkey's fractured political scene. The concern now is that widespread discontent with the ruling coalition may be an opening for another Islamic victory at the polls -- and a greater role in Turkey's politics. Or the Turkish military may simply use the latest jitters as a pretext for a crackdown on Islamic politicians.

So, with American and British special forces on the ground in Afghanistan, bombs dropping, and missiles flying, no one in Istanbul can say when life might return to normal, whatever that is. A respected artist, Fahrettin Baykal, gave me a tour of his studio in Istanbul the other day, where two smudgy brown panels contrasted with light and airy works from earlier days. He's trying to work out his own horrified response to the World Trade Center attacks. The brown murk seems to show that he's having as hard a time as the rest of Turkey -- and the world.

By Michael Kuser in Istanbul

Edited by Thane Peterson

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