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IMF rewriting Turkey’s loans

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WASHINGTON — Buoyed by Turkey's increasing importance to the West, Prime Minister Bulent Ecevit is nearing a deal with international lenders to get billions of dollars to help pull his country out of an economic crisis.

During his four-day visit to Washington, Ecevit is also seeking help with some $5 billion worth of U.S. military debt and wants the Bush administration to ease restrictions on textile, iron and steel imports.

Flanked by his economy minister Kemal Dervis, the premier was meeting International Monetary Fund Director Horst Kohler and World Bank President James Wolfensohn on Tuesday.

The IMF has already committed $19 billion to Turkey's recovery and is expected to sign a new standby agreement with $10 billion more attached to it later this year.

That will be Turkey's 20th standby agreement, and Ecevit has to prove that his government — an often-divided coalition ranging from center-left to far-right — will undertake the much-needed reforms. Those include a drastic reduction of state spending and an overhaul of Turkey's debt-ridden banks.

The 76-year-old premier does have some reforms in hand to show his determination. In line with IMF conditions, the government has pushed several laws through parliament, including a controversial bill approved last week that injects $5 billion into the troubled private banking system.

Turkey is slowly emerging from a serious financial crisis that saw the lira lose more than 50 percent of its value against the dollar, inflation soar to close to 70 percent, and more than a million people lose their jobs.

The United States has publicly praised the IMF support for Turkey and has reportedly pressed the international body to lend Turkey more money.

State Department Spokesman Richard Boucher said Monday that U.S. officials expect to discuss "Turkey's economic reform program, which remains very, very important to us, especially as regards investment and commercial issues."

Turkey's role as a strategic partner of the United States has increased significantly since the Sept. 11 attacks. Ankara is sending troops to Afghanistan for the multinational peacekeeping force and has offered to take over the force's leadership after Britain.

The United States will also need Turkey's cooperation if it decides to target Iraq in its war against terrorism.

Ecevit reiterated last week his opposition to an attack on neighboring Iraq and said he would express Turkey's concerns when he meets President Bush on Wednesday. The prime minister is expected to do the same in a meeting with Vice President Dick Cheney on Tuesday morning.

The IMF got the message that Turkey "should not be allowed to go through the wall," said Bulent Aliriza of the Washington-based Center for Strategic and International Studies.

Turkey is making significant progress under its economic program, IMF spokesman William Murray said Monday.

The fund looks forward to supporting continued efforts by Turkey under a new standby arrangement that the IMF executive board is expected to discuss later this month, Murray said.

There are few doubts a new loan agreement will be reached, but analysts warn that any new IMF loans will come with strict conditions, including a serious downsizing of the government and a crackdown on corruption in government contracts.