INTEGRATION TO THE EU's ECONOMIC ZONE IS URGENT TURKISH DEMAND - PRIME MINISTER OF TURKEY REJEP TAYIB ERDOGAN

Exclusive interview to "CASPIAN ENERGY TURKEY" of Prime Minister of Turkey Mr. Rejep Tayib Erdogan

Mr. Prime Minister which events of 2004 became historical for Turkey? On which direction will be developed Turkish economy in future? Which are major priorities in foreign economy mission of the state of Turkey?

Prime Minister of Turkey, Rejep Tajib Erdogan: Since economic downturn Turkey faced during 1998-2001, GDP growth has picked-up to reach 8%, inflation came down to single digit numbers for the first time in 30 years, export receipts rose, as well as income from tourism. Moreover, Turkey embarked on a courageous structural reform program aiming at adoption of EU norms, as well as at strengthening economic stability. The December 2004 EU decision setting a date for the beginning of accession talks with Turkey is the single most important event of 2004, which not only provided Turkey with a clear perspective for foreign political and economic relations, but also increased confidence in the Turkish economy and the future of structural reforms.

In view of the economic necessities for Turkey's EU accession, a new economic program has been elaborated. This program focuses on reforms in the social security and financial areas as well as in tax policies. A longer term goal is rationalizing the agricultural sector. Even though integration to the EU's economic zone is a primordial goal, in view of Turkey's increased trade with countries of the former Soviet Union reaching a volume of 17 billion dollars in 2004, and the presence of Turkish entrepreneurs in Russia, the Caucasus and Central Asia, economic and trade relations with this part of the world constitutes one of the main vectors of our foreign economic policy.

What do you think about today's role of Turkey in world geopolitical system of XXI, including the epoch of globalization of economy mutual relations on Eurasia economic sphere in the countries of EU? Which positive and negative tendencies affect to Turkey you can mention and how do they effect to foreign political course of Turkey?

We have to make a rational analysis of the process of globalization and interdependence which are the prevalent themes of our times. In addition to the opportunities that globalization has to offer, it also harbors a dynamic that can lead to new imba- lances and inequalities. What is crucial is to be able to pursue policies from which optimal benefit can be reaped from globalization. Those to gain the most from globalization will surely be the open, democratic and free societies governed by the rule of law.

At this time of unprecedented change, negative developments occur side by side with positive ones. Non-conventional and asymmetric threats, particularly terrorism and proliferation of weapons of mass destruction, are menacing human life and civilization. We must therefore try to prevent the adverse ramifications of these threats through co- operation and collaboration.

With this understanding, Turkey perceives international and regional cooperation as a force which, in addition to its economic benefits, creates better understanding between countries and their peoples.

In today's multipolar world, Turkey's geo-strategic disposition and historical-cultural ties with her vast surrounding region call for a multi-dimensional, balanced and pro-active foreign policy. Our ties with the European and Euro-Atlantic institutions constitute an important dimension of Turkish foreign policy. In this context, the EU accession process, the NATO alliance and relations with the US have traditionally been leading items on our foreign policy agenda.

In our multi-faceted foreign policy, the Eurasian dimension also occupies an important place. Creation of new dynamics for regional cooperation, linking Europe and Asia through energy corridors and land routes are the main tenets of our Eurasian vision.

We believe that economic development and cooperation is the foundation stone of a good, solid working relationship. With this understanding, we have spearheaded the formation of the Black Sea Economic Cooperation Organization (BSECO), which can be seen as the first successful attempt to capitalize on the post-Cold War spirit. One can observe the same logic behind another regional body, the Economic Cooperation Organization (ECO), originally founded by Turkey together with Iran and Pakistan, which was expanded at Turkey's initiative to include Azerbaijan, Afghanistan and the Central Asian Republics.

We also feel compelled to encourage positive change in our region, stretching from the Black Sea to the Caucasus and the Middle East. We seek to create an environment that is conducive to cooperation, instead of tension and conflict. To this end a primary objective of our foreign policy is to contribute to the resolution of outstanding disputes in our region. Furthermore, through a peaceful foreign policy which favors cooperation and collaboration, Turkey aims to enhance its positive image and soft power as a nation that makes effective and visible contributions in regional and global affairs.

Turkey's experience proves that integration with the world is possible by bringing values and traditions in harmony with modernity.

What's your estimation of today's level of bilateral relations between Turkey and Azerbaijan, had there already been used all potential of possible coordination both in political and economic spheres?

Turkey's special approach to Azerbaijan can be described as the National leader Heydar Aliyev said "one nation two countries". This approach finds its sources in two countries' common historical and cultural he- ritage. This common heritage lays the ground for a high level of cooperation between the two countries.

Turkey was the first country to recognize the independence of Azerbaijan and to develop close partnership relations with this country. We have been a staunch supporter of Azerbaijan in its efforts to overcome the difficulties it faced as a newly independent state.

Our economic cooperation is not at the same level as our political cooperation. Our bilateral commerce regressed in the first years of 2000's. But from 2003, we are in a new trend of improvement. From 2003 to 2004 our imports from Azerbaijan rose by 13,83% and our exports to Azerbaijan rose by 82,70%.

Which projects are deciding in eco- nomy mutual relations of two states, and how do you see their perspective in future?

A new promising era in economic and trade relations between Turkey and Azerbaijan has now begun. This era is cha- racterized with more institutionalized economic links involving major Turkish companies investing in Azerbaijan. There are already major investment projects undertaken by Turkish Petroleum, ENKA Construction, Barmek and Tekfen, all important Turkish firms. These investments concern mainly the development of Azerbaijan's energy sector. With major energy production and transport!projects coming alive in the near future, the energy sector will be an important component of economic relations between two countries. Some of the other prospective areas of cooperation are automotive industry, construction, tourism and textile.

Mr Prime Minister, do you plan to arrive to Baku with the official visit? Which possible official papers are getting ready for signing between Turkey and Azerbaijan?

The legal framework of our relations is drawn by a number of bilateral agreements signed between the two countries. High-level contacts and reciprocal visits at different le- vels are being frequently realized. In this connection, I'm also planning to visit Azerbaijan in the nearest future.

What do you think about the uncertainty of the Caspian status? Does this long term geopolitical process effect to the relations' expansion of Turkey with Caspian countries?

Turkey would like to see a solution to this problem pending since 1992. We believe that the economic development of Caspian region countries is to a great extend linked to the exploitation of hydocarbon reserves in the Caspian Sea and their transportation to the world markets. Yet, lack of a consensus on a legal document which defines the sovereign rights of five littoral states with respect to the Caspian Sea might hinder the economic potential of the region. At least, it doesn't seem to be an incentive for foreign investments particularly in the promising energy sector. Turkey, therefore, encourages the littoral states to find a solution in the interest of all parties, as soon as possible.

There is appeared the mutual relations between Turkey and Russia in last times, which political and economy projects are major for expansion of relations? We would like to know about their future perspectives.

During the past decade, our bilateral relations with the Russian Federation have developed considerably. Mutual high level visits and dialogue have intensified. President Putin's visit to Turkey in December last year was very successful. Turkey and Russia signed the Joint Declaration on the Intensification of Friendship and Multidimensional Partnership which calls for deepening multifaceted cooperation. President Putin's visit was followed by my working visit to Russia. These visits have given a new impetus to our relations. I am planning to go to Moscow again in May to attend the 60th Anniversary of the Victory Day Commemorations of the Second World War.

Turkey considers Russia an important neighbour as well as an influential global and regional actor. We believe that Turkish-Russian cooperation will contribute to peace, stability and welfare of the whole Eurasian region. Russia ranks as the 2nd major exporter to Turkey and as the 7th most important destination for Turkish goods. Furthermore, Turkey's investments in Russia have reached non-negligible levels, our contractors are major players in Russia's growing construction sector and 1.7 million Russian tourists visited Turkey last year alone. These factors bring Russia forward as one of the main economic partners of Turkey.

An important item on the agenda of high-level visits between the two countries in 2004 was the prospect of joint projects in Eurasian region. Among many fields of potential cooperation, transit energy is one of the most prominent areas for joint pro- jects.

Mr. Prime Minister, today Turkey is a large transit junction of hydrocarbon raw materials in the countries of Europe, which projects are acceptable to Turkey in the field of export, namely of gas from Turkey to the countries of EU?

The Green Paper titled "Towards a European Strategy for the Security of Energy Supply" and published on November 2000 by the EU Commission put emphasis on uninterrupted flow of gas through secured and diversified external energy supplies. This Paper created new opportunities for Turkey.

The role of Turkey as an energy corridor has been recognized by the EU Commission which decided to consider the Turkey-Greece and Greece-Italy natural gas interconnections within the framework of the "Caspian Sea countries-Middle East-European Union" natural gas priority project. The realization of this project will become a crucial component of the broader project, namely, the South-European Gas Ring, that will allow the linkage of various gas sources in the Caspian Basin and the other international sources with the European region and the Balkan area, via Turkey and Greece. The pipeline is envisaged to be operational in 2006.

Another project regarding the linkage of various gas sources in the Caspian Basin and the Middle East with the Balkans, Central and Western European markets is Nabucco. This pipeline will become the second outlet for European gas imports via Turkey. For this purpose, BOTAS has signed a Protocol with Bulgargaz of Bulgaria, Transgaz of Romania, MOL of Hungary and OMV of Austria. The pipeline is expected to be operational by 2010.

The realization of these two projects will contribute to EU's energy supply security by creating another supply route called the "fourth artery" through Turkey in addition to the already existing three major supply arteries.

Will Turkey be insisting on restriction of heavy cargoes' movement through the Bosphorus and Dardanel Straits in future? Is it possible to mention ecology situation as critics?

Turkey plays an important role in terms of global energy security. The Turkish Straits connect the world's oil markets with the major energy supply resources. Approximately 3,7 % of the total amount of world's daily oil consumption is transported through the Turkish Straits. Tanker traffic and oil transportation through the Turkish Straits have dramatically increased over the last decade. In 1996, 60 million tons of oil and oil products were transported through the Straits whereas this figure reached 143,5 million tons in 2004. Given the heavy tanker traffic as well as the physical characteristics and peculiarities of the Turkish Straits, a maritime disaster caused by a tanker carrying hazardous cargo seems inevitable and is expected to occur sooner or later.

A maritime collision and a consequent explosion may lead to the loss of thousands of lives and cause irreversible damage to the marine environment and cultural property. It is clear that the Turkish Straits are not a viable and acceptable route for transportation of hydrocarbon sources to energy consuming markets.

The solution lies at the use of alternative oil export options that by-passing the Turkish Straits. Our preference is a route which is economically viable and environmentally sustainable. Any decision in this regard should be based on economic and environmental considerations.

How does unstable price in oil world market effect to economy of Turkey?

The share of oil in Turkey's 2003 primary energy consumption is 28%. By 2020, the oil consumption is expected to increase around 50%. As a developing country, Turkey's economy is deeply affected by rippling oil prices.