TURKEY The U.S. - Turkish BRIEF: Relations March 2008 TURKEY BRIEF: The U.S. - Turkish Relations March 2008 TABLE OF CONTENTS I. COUNTRY PROFILE: INTRODUCING TURKEY................................................................ 4 1.1 STATISTICAL INFORMATION .................................................................................. 4 (HISTORY, GEOGRAPHY, POPULATION, ECONOMIC DEVELOPMENTS) 1.2 FUTURE PROSPECTS .................................................................................................7 II. TURKEY-U.S. ECONOMIC RELATIONS......................................................................... 11 2.1 LEGAL FRAMEWORK...............................................................................................11 2.2 ORGANIZATIONS IN TURKEY.................................................................................12 2.3 BUSINESS ACTIVITIES IN 2007 AND 2008 .............................................................13 2.4 TRADE RELATED ISSUES .........................................................................................20 III. MAJOR EXPORTS OF TURKEY.......................................................................................23 3.1 AUTOMOTIVE ..........................................................................................................23 3.2 IRON AND STEEL.....................................................................................................31 3.3 TEXTILE AND APPAREL...........................................................................................36 3.4 JEWELLERY ..............................................................................................................42 3.5 MARBLE, CERAMICS, SANITARY PRODUCTS, GLASSWARE ..................................45 IV. INVESTMENT OPPORTUNITIES AND PRIVATIZATION IN TURKEY ........................... 49 4.1 FINANCIAL SERVICES ............................................................................................ 49 4.2 TOURISM..................................................................................................................71 4.3 CONSTRUCTION AND REAL ESTATE.....................................................................81 4.4 ENERGY ....................................................................................................................89 4.5 HEALTHCARE.........................................................................................................114 4.6 CHEMICAL PRODUCTS .........................................................................................119 4.7 INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT)......................126 4.8 CONSUMER ELECTRONICS ..................................................................................133 4.9 FOOD AND AGRICULTURE ...................................................................................134 4.10 EDUCATION...........................................................................................................139 4.11 ENTERTAINMENT AND MEDIA ............................................................................142 4.12 DEFENSE ................................................................................................................145 V. DE‹K AND TA‹K.............................................................................................................151 I. COUNTRY PROFILE: INTRODUCING TURKEY 1.1 HISTORY, GEOGRAPHY, POPULATION AND ECONOMIC DEVELOPMENTS Turkey is a dynamic, strategically located country in the Eurasian region with a young population and a robust economy, often described as the "China of Europe." It is a nation steeped in rich history and cultural life; a realm of sprawling cities and vast rural areas; of coastal towns and tiny fishing communities. It is mountainous nation with mist-hidden plateaus, combined with enormous steppes and fertile river valleys. Sixty percent of the country is located at altitudes of 3,300 feet above sea level or higher. Located in eastern Turkey, Mount A¤r› at 16,976 feet is the nation's highest peak and the biblical resting grounds of Noah's Ark. More than 99 percent of Turkey's population is Muslim, but the nation is a secular state with a definite western perspective. Christian and Jewish communities also exist in the big cities like Istanbul, Izmir and Adana. Conservative Sunni Muslims make up the large majority of the country's Muslim population. But about a sixth of Turkey's population is Alevi, an Anatolian offshoot of the Shiite branch of Islam. TWO CONTINENTS Located on two continents -- Europe and Asia -- Turkey has always served as a bridge between the Occident and Orient. The Silk Road, the traditional trade passage connecting Europe to China, began in the ancient cities of what is now western Turkey. Eight countries border Turkey: Bulgaria in the northwest, Greece in the west, Georgia in the northeast, Armenia, Azerbaijan and Iran in the east, Iraq and Syria in the southeast Turkey is the third biggest nation in Europe in terms of territory after Russia and Kazakhstan--- nearly twice the size of the state of California. Three percent of Turkey lies in Europe. Known as Thrace, European Turkey forms the southeastern tip of the Balkans. Ninety-seven percent of Turkey is located in Asia and is known as Anatolia. A bulging peninsula, Anatolia is surrounded by the Black Sea, the Bosphorus, the Sea of Marmara, the Dardanelles, the Aegean and the Mediterranean and has been home to many civilizations, including the Hittites, and the Carian, Lydian and Phrygian empires. Anatolia served as the granary of the Roman and Byzantine Empires. Its loss to the Turks in the 11th century deprived the Byzantine Empire of its agricultural wealth and led to its eventual demise. 4 Turkey Brief: Turkish - U.S. Relations Turkey is a key member of NATO and has the second biggest standing army in Europe after Russia. It is a member of the United Nations, the Organization for Economic Cooperation and Development and other international bodies. THE FARMING NATION Turkey is a huge agricultural country, one of the few nations in the world still largely self-sufficient in food production. It is the world's biggest producer and exporter of hazelnuts, figs and pulses. It also turns out large surpluses of wheat, tobacco, cotton, barley, oats, sugar beets, fresh fruit and vegetables. Wide use of fertilizers and farm tractors since the 1950s has led to a green revolution. An ambitious $30 billion dams and irrigation project on the Euphrates and Tigris Rivers is expected to turn the neglected region of Southeastern Turkey into a Middle East breadbasket and provide badly needed electricity. The undertaking is simply known as GAP and calls for the construction of 15 dams, 18 hydroelectric plans and hundreds of miles of irrigation tunnels and canals. Officials predict the project will produce $6 billion in food surplus annually in the next decade - most of it for exports to arid the Middle East. The country is endowed with rich mineral resources. It is the world's largest producer and exporter of chromites, meerschaum and boron. It also produces large quantities of metals, and minerals such as aluminum, lignite coal, copper, iron ore and turns out sufficient amounts of sulfur, manganese and lead for exports. YOUNG PEOPLE Turkey is a nation of young people. More than half of its population is under the age 25. The country's population has grown from 13.6 million in 1927 to over 75 million in 2008. By the end of 2013, Turkey is expected to have 79 million inhabitants. It already has the third largest population in Europe after Russia and Germany and is expected to surpass Germany in the next 8 years. About 150 million ethnic Turks live outside Turkey, primarily the Balkans, and the former Soviet Caucasus and Central Asia, Iran, China, Cyprus, Iraq and Syria. Nearly 3.5 million expatriate Turkish nationals work and live in the European Community. Turkish nationals make up about 3 percent of Germany's population. Since World War II, millions of peasants from the countryside seeking work opportunities and higher living standards have migrated to the cities. About 70 percent of Turkey's population lives in cities today, compared to only 25 percent in 1950. By the year 2015, 75 percent of Turkey's projected 80 million will be living in urban areas. Some 17.8 percent of Turkey's population already lives in Istanbul - a nightmare scenario for the city's urban planners. Turkey Brief: Turkish - U.S. Relations 5 The shift in population from rural areas to the cities in the past five decades has financially overstretched government resources, compelling state planners to find ways to create millions of new urban jobs and invest billions of dollars in new housing projects, infrastructure, health services and schools and universities in the metropolitan areas of the country. ATATÜRK’S REFORMS Turkey was proclaimed a republic in 1923, emerging from the ruins of the Ottoman Empire which ruled the Middle East, North Africa, the Balkans and parts of Eastern Europe for over 450 years. The Ottoman Empire crumbled after its disastrous World War One defeat as an ally of the Central Powers. From 1923 to 1938, Kemal Atatürk, the founder and first president of the Turkish Republic, carried out sweeping reforms that transformed the country from a backward, feudal state to a progressive nation with a western outlook. The Sultanate was abolished. Atatürk replaced the Shariah, or Islamic holy law, with civilian, trade and criminal codes adopted from Switzerland, Italy and