US embassy cable - 05ANKARA6636

UNCLAS SECTION 01 OF 02 ANKARA 006636 
 
SIPDIS 
 
TREASURY FOR PLANTIER 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID, ELAB, SOCI, TU 
SUBJECT: CORRECTED COPY -- WORLD BANK HELPS ADDRESS DEEP 
SOCIAL NEEDS 
 
 
1.  (SBU) Summary:  Within its total $6 billion portfolio, 
the World Bank is currently allocating $1.7 billion to 
social sector projects that assist workers laid off by 
privatization, strengthen health care delivery through 
transitioning to universal health insurance, and improve 
school curricula and conditions.  While the privatization- 
and health-related projects have been quite successful, the 
Bank may be forced to withdraw $150 million in education- 
related loans due to lack of cooperation from the Ministry 
of National Education.  Rather than alienating Turkish 
bureaucrats with a laundry list of legal "conditions" for 
Bank lending, the Bank's local leadership has found its 
quiet, behind-the-scenes approach quite successful in 
advancing positive change. End summary. 
 
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Smoothing Transitions for Laid-Off Workers 
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2.  (SBU) The World Bank has made a priority of trying to 
ease the social strains of privatization, which has been 
hotly opposed by labor unions and many parts of society. 
Building on its 2000-2005 Privatization Social Support 
Project, the World Bank and Turkish Treasury signed a $465 
million follow-up program on October 25.  Both projects are 
designed to assist employees of state-owned enterprises who 
lose jobs because of privatizations.  John Innes, who 
coordinates social sector projects at the Bank's Ankara 
office, said the Bank hopes to mitigate negative perceptions 
of privatization by helping laid-off employees transition to 
other employment.  The Second Privatization Social Support 
Project takes a three-pronged approach - job loss 
compensation, labor redeployment services, and management, 
monitoring, and evaluation.  In coordination with Iskur, the 
Turkish Employment Agency, the project provides job 
counseling, placement services, labor retraining, and 
temporary employment. 
 
3.  (U) In addition, the Bank is partially funding six micro- 
business incubators in six cities throughout Turkey.  These 
incubators, in conjunction with local chambers of commerce, 
provide part of the start-up capital for new businesses to 
employees who have been laid off because of privatization. 
The financing is repaid over three years, after which the 
businesses are expected to be self-sufficient.  Innes said 
the first such incubator is already self-sufficient from 
reflows of microcredits. 
 
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Broadening Access to Medical Care 
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4.  (SBU) Turkey ranks far behind most middle-income and EU 
accession countries on key health indicators.  World Bank 
data suggests that 36 to 37 percent of the Turkish 
population does not have health insurance.  Government 
health care spending mainly benefits higher-income groups, 
and the poor face numerous barriers to access.  The World 
Bank cites four key reforms which would improve the overall 
health care system in Turkey: the expansion of health 
insurance to cover all citizens, strengthening primary 
health care services, ensuring that poorer areas have access 
to professional medical care, and boosting the quality of 
maternal and child health care services. 
 
5.  (SBU) With these reforms as the goal, the World Bank 
launched its Health Transition project in 2004.  With a $60 
million budget, the project assists Turkey's preparation for 
universal health insurance, helps develop national health 
care standards, and strengthens the Ministry of Health into 
an effective policy-making entity.  Innes noted that the 
country's best-run hospitals used to be under the Social 
Security Institution (SSK) but have now been brought under 
the Ministry of Health, with a resulting loss of financial 
control, particularly for medicines.  For example, SSK 
hospitals used to require patients go to special pharmacies 
which restricted spending on drugs.  The Ministry of Health 
reimburses for any purchases, including for overpriced 
generic drugs.  As a result, the GoT is footing a much 
larger pharmaceutical bill, leading to health spending 
overruns in 2005.  (Currently the GoT is spending 0.35% of 
GDP on medications.)  According to Innes, the GoT is 
investigating measures to bring these costs under control. 
Foreign research-based pharmaceutical companies are worried, 
however, that these cost-saving measures will restrict 
access to their "innovative" products in favor of local 
generics. 
 
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Upgrading and Expanding Access to Basic Education 
--------------------------------------------- ---- 
 
6.  (U) According to World Bank reports, in 2000, the 
average adult literacy rate was 86.5%; however, the literacy 
rate for adult women was only 76.5%.  That same year, only 
85% of primary school-aged females were enrolled in school. 
The World Bank reports the leading problems in public 
schools are lack of books and supplies, poor teaching, and 
substandard school conditions.  Under the $300 million Basic 
Education Project, the Bank seeks to remedy these problems 
by funding the refurbishment of 500 schools, the provision 
of educational materials for 4000 schools, additional 
training for teachers and inspectors, construction and 
furnishing of 300 new preschool classrooms, and 
rehabilitation of 60 schools for children with special 
needs.  In its $104 million Secondary Education Project, 
approved in February 2005 and scheduled to be signed in 
early 2006, the World Bank plans to support Turkey's reform 
of the secondary school curriculum.  The end goal of the 
project is to ensure that all students graduate with the 
same basic skills, regardless of whether they attend general 
or vocational high school. 
 
7.  (SBU) Innes said that working with the Ministry of 
National Education has been particularly difficult.  The 
Ministry employs seven Deputy Under Secretaries and 28 
Director Generals, resulting in a massive, unwieldy 
bureaucracy.  While Innes noted that the World Bank has good 
policy dialogue at the university level, he said that the 
lack of cooperation at the elementary and secondary levels 
may force the Bank to pull back $150 million of its $300 
million commitment. 
 
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Comment 
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8. (SBU) Meeting the needs of a young (60% under the age of 
30), poor (27% living in poverty) and fast growing (2.4 
children per woman) population is Turkey's principal 
economic and political challenge as it integrates into the 
European and global economy.  With Turkey its second-largest 
borrower worldwide, the Bank is a key agent of change, 
particularly in breaking down the ossified system of state 
companies and heavily centralized educational and health 
systems that do not offer flexibility and choice for meeting 
modern needs.  Despite its large portfolio, the Bank's moral 
and persuasive influence is far more important than the 
dollar amount of the financing it provides.  The Bank's 
local leadership therefore believes that it can be most 
successful working quietly behind the scenes to change 
attitudes rather than by putting heavy-handed legal 
"conditions" on Bank lending that would tend to cause 
Turkish bureaucrats and politicians to balk and walk away. 
But when it needs to get tough, such as with the education 
projects, the Bank has shown that it is able to do so. 
 
McEldowney