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FT: Turkey Hits US Business After "Armenian Genocide" Vote

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Turkey has frozen its efforts to strengthen defence, energy and trade ties with the US after a congressional panel labelled the Ottoman-era killing of Armenians as “genocide,” according to the country’s minister for foreign trade.

The freeze on new economic initiatives with the US stands in sharp contrast to Turkey’s rapidly developing ties with its neighbours to the north and east, where it is pursuing closer integration as part of a policy of greater regional engagement.

Washington has long viewed Turkey as a key strategic ally and an important partner on energy matters and in Afghanistan and Iraq.

However, trade between the two countries is dominated by US arms and aerospace sales to Turkey — an imbalance that Ankara had hoped to correct. Mr Caglayan had been charged with developing economic ties in the “model partnership” proposed by Barack Obama, US president.

“We were hoping that beneficial steps could be taken . . . in the context of this model partnership,” Mr Caglayan told the Financial Times.

The American-Turkish Council, the US organisation that promotes commercial, defence and cultural relations, has postponed its annual conference because Ankara had advised public and private businesses that its policy was to curtail official visits because of the congressional vote.

That announcement came after Turkey this month made its strongest assertion yet of economic independence from the west by cancelling talks on a new loan from the International Monetary Fund.

The Ankara government said it could “stand on its own feet,” after some 50 years as one of the IMF’s most assiduous and crisis-prone clients.

Writing in Hurriyet Daily News, the columnist Semih Idiz noted: “Turkey . . . has started to act more freely from its traditional allies and partners, and is veering toward other parts of the world in search of new partners.” He described the latest events as a “visible expression of Turkey’s desire to be an independent actor free of western encumbrances.”

Ankara is also forging links with other emerging economies. Taner Yildiz, energy minister, this month signed a deal paving the way for South Korea’s state power company to build a nuclear plant on the Black Sea coast, bypassing the option of an open tender.

Talks with Russia over a nuclear plant are already under way. The day after the US “genocide” vote, Turkish diplomats flew to Moscow to discuss the nuclear project and an intricate web of pipeline deals. Dmitry Medvedev, Russian president, is due to visit Turkey in May.

This was a “signal” that “Turkey could, if an unwanted scenario em-erged, strengthen its ties with Russia,” said Sinan Ulgen, head of the Edam think-tank in Istanbul.

On the ties with Russia, Mr Caglayan said: “Turkey and Russia are strategically close counterparts and two countries that are willing to increase economic and commercial ties.

“I’d like to emphasise this fact that Turkey and Russia are very sincere in their relations.”

Turkey’s new economic partnerships and broadening diplomatic horizons will not necessarily weaken its traditional alignment with the west.

Thanks to proximity and the customs union with the European Union, Europe remains Turkey’s most important market, receiving about 60 per cent of its exports.

On energy, the strategy is to keep all options open — joining western-sponsored projects, such as the Nabucco pipeline aimed at bringing Caspian and Iraqi gas to the EU, as well as Russian-backed proposals.

But many in Washington assume Turkey will abstain from supporting more sanctions on Iran in the United Nations Security Council, where it holds a non-permanent seat.

Philip Gordon, one of the US administration’s strongest proponents of ties with Turkey, said last week that Ankara should not pursue its aim of “zero problems” with neighbours “uncritically or at any price.”

Mehmet Ali Birand, a Turkish political commentator, has pointed out that US-Turkish trade amounted to about $15bn in 2008, with Turkish-Russian trade totalling more than treble that amount.

He questioned which partnership would prove more persistent. “Is it the one on paper with the slogan ’strategic partnership’, progressively becoming irrelevant, or the one amounting to $50bn-$100bn?”

By Delphine Strauss in Ankara

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