US ambassador warns Turkey over $2.3bn of unpaid debts owed to pharma companies

US ambassador warns Turkey over $2.3bn of unpaid debts owed to pharma companies
Ondokuz Mayis University Hospital in Samsun on the northern coast of Turkey.
By bne IntelIiNews September 23, 2020

Debts owed by Turkish state hospitals to pharmaceutical companies in the US and elsewhere have risen to $2.3bn from $230mn a year ago and Turkey would ignore the debts at its peril, the American ambassador to Turkey said on September 23.

Companies would consider abandoning the Turkish market if Turkey failed to fully meet the debt payments to American pharmaceutical firms, the ambassador, David Satterfield, was reported by Reuters as saying in addressing a trade conference streamed online. Satterfield also criticised a new Turkish law that can be used to crack down on big social media sites.

Satterfield was quoted as saying during the conference hosted by the US-Turkey Business Council that US Commerce Secretary Wilbur Ross raised the debt issue with Turkish President Recep Tayyip Erdogan and Finance Minister Berat Albayrak a year ago and was assured that arrangements would be made for prompt payment.

A year later those companies were being asked to accept significant reductions in the amounts owed, Satterfield said, adding that there would be consequences for non-payment of debt or reductions in payment.

"Companies will consider departing the Turkish market or will reduce exposure to Turkish market. This is not a direction which serves the interests of Turkey," he was cited as saying.

Bilateral trade between Turkey and the US amounted to $21bn last year but Ankara and Washington have stated that they aim to raise that to $100bn.

Trade goal efforts ‘damaged’

During the conference, Turkish Trade Minister Ruhsar Pekcan said steel tariffs imposed by the US and the removal of Turkey from a US trade preference programme have damaged efforts to reach the trade goal. "Such policies by the US severely limit Turkish firms' ability to enter the US market," she said.

Another concern is that if Turkey activates advanced S-400 missile defence systems acquired from Russia last year, the US may hit Ankara with sanctions. Turkey is already barred from receiving ordered F-35 fighter jets for having bought the S-400s in the first place and the Americans are continuing to squeeze Turkish defence firms out of F-35 components manufacturing by finding alternative suppliers at home or in other countries. The scale of Turkey’s involvement in making F-35 components has hindered US officials from ending the Turks’ supply role as fast as they originally intended.

Turning to a law adopted in July that the Erdogan administration says will make mostly US social media sites more accountable to Turkish authorities' concerns over content, and which critics describe as an effort to silence dissent, Satterfield voiced concern.

"A policy that mandates large social media firms to store consumer data only in Turkey can create an inherently uneven playing field," he said, adding that it could eventually compel US firms to leave the market.

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