Accessibility links

Turkish Stocks Plunge - 2003-03-03

Turkey's fragile economy on Monday began feeling the effects of the parliament's rejection of a measure to allow U.S. combat troops to be deployed in Turkey.

The Istanbul Stock Exchange's main index plunged by 11 percentage points in early trading Monday. And the Turkish lira began depreciating against the U.S. dollar, prompting the Central Bank to intervene in the markets.

Market jitters were widely anticipated after the parliament on Saturday narrowly rejected a bill that would have enabled U.S. troops to use Turkey as a staging ground for a possible second front against Iraqi forces in Kurdish-controlled northern Iraq.

The Bush Administration had agreed to give Turkey $4 billion in grants and $2 billion in military credits in exchange for Turkey's backing. But the financial aid package now hangs in the balance as Turkish leaders consider their next move.

Prime Minister Abdullah Gul says his government is still assessing whether to present the same bill to parliament for a second time. But analysts say it is unlikely do so in the near future, given the strong domestic opposition to a war against Turkey's fellow Muslim neighbor.

It is this opposition that compelled many members of the ruling Justice and Development Party to vote against the motion, despite government backing for the measure.

U.S. officials say they will keep navy ships carrying equipment and U.S. troops waiting off Turkey's Mediterranean shore until the situation in Ankara is clarified. Marine General James Jones, supreme allied commander in Europe, told reporters that he was hopeful that Turkey would change its mind. He added, however, that the United States was considering alternative plans if the Turkish parliament once again refuses to allow U.S. troops to be based in Turkey.