Turkey holds off on Iraq invasion

By bne IntelliNews October 23, 2007

Nicholas Birch in Istanbul -

Turkish stocks stabilised and the lira strengthened slightly against the dollar on the morning of Tuesday, October 23 as Turkey's government announced last-ditch diplomatic efforts to resolve the problem of Kurdish violence without invading Iraq.

With markets down the world over, the ISE-100 out-slumped most to end the previous day 2.7% down, amid fears the Turkish military would invade northern Iraq in pursuit of Kurdish rebels who killed 12 Turkish soldiers at the weekend.

With Turkish troops continuing to build up along the Iraqi border, though, Foreign Minister Ali Babacan said Turkey favours finding solutions through diplomatic means. "Parliament now has the authority to order cross-border operations," Babacan, who is due in Baghdad Tuesday, October 22 for talks with the Iraqi government, said. "But it does not mean we have to use it."

Meanwhile, speaking to reporters on a plane that was taking him to London on Monday, Prime Minister Tayyip Erdogan hinted that the US may join Turkey in a military operation against the Kurdistan Workers Party, or PKK. "US Secretary of State Condoleeza Rice was concerned about the situation when she telephoned me [on Sunday] and I saw that the US is willing to act jointly," he said.

Erdogan is due to have talks with George Bush in Washington on November 5. Few analysts expect Turkish cross-border operations before then.

Hostages and a ceasefire

The PKK, which confirmed that it had captured eight Turkish soldiers during clashes at the weekend, announced a temporary ceasefire Tuesday morning. The announcement was met with a mixture of contempt and anger in Turkey, which has grown used to occasional PKK ceasefires since the Kurdish group declared war on Turkey again in 2004. Over 70 Turkish soldiers have died since the PKK announced this summer that it would put a stop to temporary operations; 30 have died in October alone.

What Turkey is demanding is not a lull in fighting, but for the PKK to put down its weapons for once and for all. It is also hoping the US can help it capture leading members of the PKK, who have been based in camps in northern Iraq since the early-1990s.

It is unclear whether Washington will be able to arrange that. While it now appears fully cognizant of the seriousness of Turkish threats of military action, it has so far been unwilling to put too much pressure on the Iraqi Kurdish groups who control northern Iraq and who have been the US' staunchest allies since it toppled Saddam Hussein in 2003.

While there was talk in the Turkish press this morning of the possibility of Iraqi army operations against the PKK, the Iraqi parliament has made it clear it doesn't have the strength to dislodge the Kurdish group. Iraqi Kurds have fought the PKK in the past, and show little willingness to do so again.

With Turkish troops continuing to build up to the north of the Iraqi border and clashes ongoing, most analysts think an operation is almost inevitable. "Action has been delayed but not cancelled," says Rusen Cakir, a columnist for the daily Vatan.

In all likelihood, adds the editor of the daily Radikal Ismet Berkan, Turkey will aim to push PKK units back from their positions on the Turkish border towards their base camps on Kandil mountain, 50 miles inside Iraq.

Head of research for the brokerage Ak Securities, Erkan Savran, doesn't necessarily think operations are a major cause for concern. "We're expecting pinpoint attacks, not a full-scale operation," he says. "If anything, Turkish markets are likely to be more affected by increased volatility on US markets."

There remain question marks, though. Shortly before declaring a truce, the PKK's military commander Murat Karayilan told the pro-Kurdish news agency Firat that his fighters had not ruled out attacks on the pipelines that transport Iraqi petrol via Turkey to the Mediterranean. And in an article published on Monday, the Russian daily Kommersant commented that oil prices could rise to $100 to the barrel in the event of a Turkish attack on Iraq.

For Turkey, heavily dependent on imported energy and struggling to balance its budget, that could have very serious effects.

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