[Intl-tobacco] Turkey Deregulates Tobacco

[Robert Weissman]

Turkey Deregulates Tobacco
Source: AP, 2002-01-04ANKARA, Turkey ÐÐ  

Turkey's parliament
overrode a presidential veto and ratified a law that breaks the grip
of the state tobacco monopoly on prices and production here, meeting
a demand by the International Monetary Fund.

The bill, approved late Thursday, opens the way for privatization of
the state tobacco monopoly which currently fixes prices for farmers'
tobacco sales as well as for cigarettes sold to smokers.

President Ahmet Necdet Sezer had vetoed the same bill in July on
grounds it made no provisions for thousands of tobacco growers who
would be harmed. But lawmakers debated and passed the bill for a
second time without making any changes to its original form. Sezer
is now forced to approve the law.

Under the new law, farmers will sell their tobacco to cigarette
companies in open auction. Previously, the state monopoly bought all
tobacco at a fixed price. This led to overproduction, and the
monopoly often had to burn excess tobacco.

Tobacco companies like Philip Morris, which is already making and
selling cigarettes here, will be able to buy tobacco from farmers
and sell cigarettes at market prices.

The law also allows big producers based here to use imported as well
as locally grown tobacco.

Such deregulation was part of a package of reforms pledged to the
IMF which has already committed $19 billion in loans to help Turkey
battle a crisis that saw the currency slide and unemployment soar.
The IMF is expected to offer another $10 billion later this month.

Turkey has promised the IMF it will use the funds to back a tough
economic program to cut public spending, shrink the state's role in
the economy, and complete the restructuring of a banking sector
whose flaws were a key cause of the crisis.

The government hopes the plan will boost growth to 5 percent this
year. The economy was expected to contract by up to 8 percent in
2001.