Turkey Halts Tobacco Privatization (fwd)

[Robert Weissman <rob@essential.org>]

Turkey stops tobacco venture with B.A.T. 
 Monday February 1, 1999 

 IZMIR, Turkey, Feb 1 (Reuters) - Turkey's new Industry Minister Metin Sahin
said on Monday all
 work to partially privatise its state-owned tobacco monopoly through a
$280-million joint stock
 company with the Anglo-American firm B.A.T. had been stopped, Anatolian
news agency said. 

 ``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,'' Sahin was quoted by the
agency in the leading tobacco
 producing Izmir city in western Turkey. 

 ``Therefore we stopped all processes that have been carried out to date.
There will not be any
 privatisation of the monopoly during our term,'' he said. 

 Turkey struck a deal with B.A.T. last January to set up a joint stock
company between TEKEL, its
 spirits, cigarette and wine monopoly, and B.A.T., in which the latter would
have a 52 percent stake. 

 The deal, much criticised by TEKEL employees, trade unions and tobacco
producers, also
 envisaged that B.A.T. pay TEKEL $100 million in exchange for a 49-year
exclusive license to
 produce TEKEL's Samsun and Yeni Harman cigarette brands and produce
cigarettes in the new
 Akhisar plant. 

 Sahin said his newly appointed minority government, which took office in
early January to take the
 nation to elections scheduled for April, would not allow for any
privatisation of TEKEL. 

 ``We do not want to privatise TEKEL and that will not happen during our
term, but we will begin
 work to make its management autonomous,'' he said. 

 ``We will also have to solve its finance problems,'' he said. 

 TEKEL is heavily in debt to the Treasury for its tobacco purchases from
farmers. 

 Turkey's previous coalition government prepared a draft law to end TEKEL's
monopoly in alcohol
 production and another bill to reform the tobacco sector last summer. 

 The bills are pending parliament's approval, which is highly unlikely to
happen during the current
 government's term. 

 Turkish tobacco producers' unions and trade unions have launched campaigns
to stop TEKEL's
 foreign partnership, arguing that the move violates privatisation laws by
altering TEKEL's share
 structure without legislative amendments. 

 TEKEL is not on the official privatisation agenda, but former governments
have favoured a sale
 because of increasing global competition and Turkey's customs union with
the European Union.