US embassy cable - 03ANKARA1780

UNCLAS ANKARA 001780 
 
SIPDIS 
 
 
SENSITIVE 
 
 
STATE FOR E, P, EB/IFD AND EUR/SE 
TREASURY FOR OASIA - MILLS AND LEICHTER 
NSC FOR QUANRUD AND BRYZA 
 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, PREL, TU 
SUBJECT: TURKISH MARKETS COB MARCH 19:  LIMITED FURTHER 
DECLINE; EMBASSY AND GOT STATEMENTS 
 
1.  (U)  After falling significantly in the morning, Turkish 
markets declined only slightly in the afternoon session, as 
investors struggled to figure out whether some kind of U.S. 
assistance package might still be possible.  At market 
closing, the lira had weakened to TL 1,695,776/dollar, while 
the yield on the benchmark t-bill had risen to 66.05 percent. 
 The stock market fell 6.1 percent for the day. 
 
 
2.  (SBU) At the GOT's request, Embassy released a press 
release in mid-afternoon (using text of Washington-approved 
press guidance), which stated: 
 
 
"Turkey has made impressive progress over the past two years 
in stabilizing and reforming its economy, as evidenced by the 
strong economic recovery.  The policy framework makes 
Turkey's economy more resilient and more likely to achieve 
sustained growth.  We have confidence in the Turkish 
government's commitment to strong economic policies, and have 
every expectation they will continue them, working with the 
IMF, which we welcome.  This program, if fully implemented, 
will lead to further strengthening of the Turkish economy. 
The U.S. government has supported Turkey's IMF and World Bank 
programs and will continue to do so as long as Turkey 
continues to implement strong economic policies." 
 
 
3.  (U)  The Embassy distributed the press release just as 
Prime Minister Erdogan was announcing that he expected such a 
statement by the end of the day.  A few minutes earlier, 
State Minister Babacanent had announced that: "There is 
always agreement that the United States will give strong 
support to Turkey.  Apart from that, there is nothing and it 
is not possible to say anything more now." 
 
 
4.  (U) The Embassy press release has been running as the top 
story in the local press over the past few hours, with some 
TV channels welcoming it as a statement of support and others 
expressing disappointment because it indicated U.S. support 
would be verbal only. 
 
 
5.  (SBU) Bender Securities' Murat Gulken told us tonight 
that markets had not reacted significantly to these public 
indications that there would be no U.S. package because "the 
fog (i.e., confusion) was so thick, it will take more than an 
hour to clear."  He predicted further market declines 
Thursday as the absence of a package sinks in. 
PEARSON