WSJ -- More on Turkey Stopping Privatization

[Robert Weissman <rob@essential.org>]

February 4, 1999 


 Business and Finance - Europe

 Turkey Halts BAT Tobacco Deal
 In Government's First Decision

 By JAMES M. DORSEY 
 Special to THE WALL STREET JOURNAL

 ISTANBUL, Turkey -- Turkey's newly appointed left-wing minority
 government, in its first major economic decision, has canceled a $280 million
 deal with British American Tobacco PLC aimed at privatizing the country's
 state-owned tobacco producer.

 Echoing past opposition to privatization, Industry Minister Metin Sahin said
 the sell-off, which would have given BAT a 52% majority stake in the
 tobacco monopoly, Tekel, wasn't in Turkey's interest.

 "There is interest from foreign cigarette producers in having a share in the
 local industry, but we have seen that this will be against the producer.
 Therefore, we stopped all processes that have been carried out to date. There
 will not be any privatization of the monopoly during our term," Mr. Sahin said.
 Instead of selling a stake in the company, the minister said that the
government
 would "work to make Tekel's management autonomous' and clear its debt to
 the treasury as a result of its tobacco purchases.

 The government's rejection of the BAT deal will put on ice proposals in
 Parliament, drafted by the previous government, to end Tekel's monopoly on
 alcohol production in Turkey and reform the tobacco sector.

 BAT spokesman Michael Prideaux said the government's decision had not
 come as a surprise following a breakdown in negotiations last August.
 "Governments that don't have a clear mandate tend not to make progress on
 politically sensitive privatizations," Mr. Prideaux said. The BAT-Tekel deal,
 proposed a year ago, called for the creation of a joint stock company in
 which BAT would have had a 52% stake. The deal -- opposed by Tekel
 employees, trade unions and tobacco producers -- also would have had BAT
 pay Tekel $100 million for a license to produce two of the Turkish
 monopoly's local cigarette brands, and allowed BAT to use a Tekel
 production facility at Akhisar.