TURKEY, PAKISTAN EXPECT MORE HELP FROM I.M.F., OTHERS.
Turkish Economy Minister Kemal Dervis said the international community led by the IMF is likely to provide additional financial help to Turkey should it suffer from any conflict that follows from last week's terrorist attacks on New York and Washington, reports the Wall Street Journal Europe. In a speech to investors, Dervis said Turkey and the EU were likely to draw closer, as the latter realized the importance of having "a modern, Muslim country" among its membership.
Speaking earlier to CNBC, Dervis said "Turkey ... will of course support the actions of the international community and of NATO" in the aftermath of the terrorist attacks. But in a speech to investors, he later added that Turkey might incur costs as a result of its support for "actions and measures that will make this kind of terrorism impossible in the future."
While he had no direct knowledge of the IMF's intentions, Dervis said he expected the Fund to lead efforts to compensate for those costs. "I'm sure the international community will analyze these costs under the leadership of the IMF," he said. "I do believe that international institutions are there to act proactively and put in place mechanisms of adjustment."
Turkey already faces a difficult economic situation, with some analysts doubting its ability to meet its debt payments this year and next. A full-blown conflict in the Middle East would hit Turkey hard as it is dependent on oil imports, tourism revenues and external financing.
Dervis said that over the longer term the events of the past week would strengthen Turkey's resolve to become a member of the EU. But he added that those events "will also show Europe how important Turkey is, and that it needs to be integrated faster and more decisively than in the past."
The news comes as Dow Jones notes that a Pakistani delegation will leave for Washington to discuss with the IMF the possibility of a new loan for Pakistan, vital to tiding over its balance of payments, which has been burdened by $32.75 billion worth of debts. Speculation is growing that Pakistan hopes to be rewarded for its recent diplomatic moves [to pressure Afghanistan's Taliban regime, which allegedly harbors the prime suspects for last week's terrorist attacks on the US] by new loans from the IMF, the World Bank and other international lenders.
Meanwhile, the Washington Post (p.E1) reports that many analysts suspect that the Bush administration will have to subordinate its pro-market stance still further to the imperative of waging war against terrorism. For example, the IMF and the World Bank appear likely to be used to reward nations, notably Pakistan, whose help is essential to marshal a global anti-terrorist coalition.
Further, the Pakistani government yesterday warned that Afghanistan was facing a "humanitarian catastrophe" with hundreds of thousands of Afghan refugees converging on the border with Pakistan, reports the Financial Times (p.5). The warning, which followed the withdrawal of all remaining UN relief workers from Afghanistan over the past three days, came amid increasingly desperate Pakistani efforts to persuade the Taliban regime to hand over Osama bin Laden, the Saudi dissident and prime suspect behind last week's terrorist attacks on the US, says the story.
U.K. TO IMPROVE WAYS OF TRACKING TERRORIST FINANCES. The British government has proposed measures to improve the mechanisms for tracking the flows of funds that finance terrorism, including tougher requirements on banks to report suspicious transactions, reports the Financial Times (p.6). Britain believes it has greater expertise in cutting off terrorists' sources of finance because of its 30 years of experience with Northern Irish terrorism, and will call on other countries to follow its lead.
One recommendation is that the Financial Action Task Force (FATF), the international group intended to combat money laundering, should be more specifically focused on tracking down terrorist funds. International banks are currently required to report only funds they suspect may stem from criminal activity. The British government is suggesting that they should also be compelled to report flows of funds from legitimate businesses they suspect may be used to finance terrorist activity: a requirement that already exists in Britain.
Chancellor of the Exchequer Gordon Brown also hopes to use the informal Ecofin meeting of European finance ministers this weekend to call on the European Parliament to speed up implementation of the EU's directive on combating money laundering. This has been delayed because of concerns about the threat to lawyers' client confidentiality.
"There can be no safe havens for terrorists, and no hiding place for the funds they sue to carry out their atrocities," said a British government official.