Turkey seeks to soothe markets

Ecevit said the government would not resign over the crisis

ANKARA, Turkey (CNN) -- Turkey is attempting to limit the country's financial crisis following a political row which wiped billions of dollars off share prices.

The Istanbul Stock Market IMKB-100 Index was down six percent following Tuesday's afternoon session, after losing 15 percent on Monday.

The financial crisis was sparked when Prime Minister Bulent Ecevit stormed out of a National Security Council meeting with military and political leaders on Monday saying President Ahmet Necdet Sezer had insulted him.

But a calmer Ecevit has said he will try to put the row behind him and ensure no repeat of the political friction that sparked the crisis.

AUDIO Zafer Arapkirli, Journalist comments: Financial crisis 400kb/37sec.. AIFF or WAV sound Political blame game 470kb/43sec.. AIFF or WAV sound CNN's Ercan Kumcu: Abnormally high interest rates 527kb/48sec.. AIFF or WAV sound

"The sad situation at the National Security Council meeting will cause no change in or variation in the course of the economic programme," Ecevit said.

"There may be rows, there may be misunderstandings. We try to overcome these but before all else comes the smooth working of the state."

The government is tasked with regaining the confidence of the markets and international donors as investors drained nearly $5 billion from central bank reserves.

The Turkish press was scathing in their reaction and said the row would cost Turkey dear as the country struggles to recover from an earlier financial crisis.

"We are going to do everything possible to make sure this will not lead a new economic crisis," Ecevit said, ruling out the possibility that his government would resign.

The row erupted as an IMF delegation visited for talks on Turkey's reform commitments that are a condition of an $11 billion aid package.

With political tensions causing interest rates to rise, the government abandoned plans to auction one-year bonds, opting instead for one-month bonds.

The move was designed to allay concerns about economic stability which is seen as central to the success of Turkey's ambitious anti-inflation programme, which is backed by the IMF.

Turkish Economic Analyst Ercan Kumcu said interest rates would continue to be abnormally high in the wake of the crisis but expected stability to soon return to the markets.

Ecevit and Sezer have frequently been at odds since the president was elected by parliament, with Ecevit's backing, last May.

Sezer, a newcomer to politics and determined to root out corruption, has questioned his government's will to act to investigate.

Reuters contributed to this report.

Crisis rocks Turkish government
February 20, 2001
Political row hits Turkey shares
February 19, 2001
Brawl death: Pressure on Turkish PM
January 31, 2001
Thousands of Turks protest over IMF plan
December 1, 2000
Turkey's relations with EU reach crisis point
November 26, 2000
Lawmakers reject new term for Turkey's president, spurning premier's appeal
April 5, 2000

Office of the Prime Minister
Turkish Prime Minister
President of the Turkish Republic
International Monetary Fund
Hurriyet
Milliyet

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.