Waiter serves Turkey

The first step Necmettin Erbakan, Turkey’s Islamist prime minister, took was to give a 50% pay rise to civil servants and pensioners. With the public sector borrowing requirement already raised from 8.5% of GDP to 10%, the shocked market wanted to know where the money would come from. “Allah will give us, we will give to them,” soothed Erbakan. He went on to promise to double the minimum wage and exempt it from tax, and erase the interest payment on farmers’ debts.

Under him, he announced, Turkey would become a “waiter state”, putting food on the table of the low-income masses who voted for his Welfare Party (Refah). But the doubting Union Bank of Switzerland (UBS), lacking faith that spiritual aid would be forthcoming in the form of hard cash, sent a circular to clients advising them to sell Turkish stock. The visionless Sakura Bank of Japan decided to stop taking Turkish risk until the situation clarified.

Before coming to power Erbakan had conjured up the shining image of an Islamic common market which he would establish, and promised to replace currencies in all Islamic countries with the Islamic dinar.

But perhaps Erbakan’s words should not be taken at face value. Bülent Ecevit, ex-prime minister and chairman of the Democratic Left Party recently told parliament that, when he and Erbakan were in coalition in 1974, one morning he opened the newspaper to see that his partner had declared that Turkey would build 100,000 planes and tanks.

“How are we going to build 100,000 planes and tanks? What do we need 100,000 planes and tanks for?” he asked Erbakan. “In politics,” replied Erbakan, “such declarations should be taken not literally but as declarations of intent.” Metin Munir

Dial Brussels for the euro-hotline

They take European monetary union very seriously in Brussels, now the site of the world’s first euro-hotline, set up in July by Banque Bruxelles Lambert (BBL).

The telephone service is advertised at the bottom of every customer’s statement. “EMU will happen soon,” says Eric Tashman, who created the service. “We have less than 900 days to go.”

BBL reports it has received 1,500 calls, and tells inquisitive callers that Benelux and Austria will join in the first stage with France and Germany. It gives Ireland and Denmark a 75% chance of joining. Spain is given 40%, the UK 30%, and Italy 20%. Greece has a chance of “1% or something like that”.

The BBL team are commonly asked whether monetary union is just a sly repeat of the Gutt operation, named after Camille Gutt, who as minister of finance after World War II recalled the money supply to catch people who had profiteered during the war. Belgians are now concerned that their hidden tax-free fortunes in Luxembourg will be exposed.Steven Irvine

Too few natty dressers at NatWest

“It has been the biggest talking point at the bank since the takeover,” says a director of NatWest Markets, following the acquisition of Greenwich Capital on June 11. He is, of course, talking about dressing down. “It is symbolic of a culture change,” adds the director, “but there are some die-hards who are determined to resist it.”

Chaos, confusion and colour-clashes followed the bank’s liberalizing dress measure as traders went long Ralph Lauren and short Thomas Pink. On Tuesday, the day of the acquisition, a memo anounced the new dress code (casual on Friday); by Thursday it emerged that the FX and treasury division chiefs had not confirmed the deal.

Blame television. When NatWest economists are being interviewed, producers like to place them in front of the bank’s photogenic FX dealing room with its tiers of concentric rings. The bosses were worried that pictures of traders in jeans and T-shirts might tarnish the bank’s image.

Others believe their objections were more a case of a fear of a cross-Atlantic cultural invasion.

But Stephen Colton, a manager in the bank’s public relations department, strongly denies that the two events were connected. “That the two announcements were made on the same day was purely coincidental,” he says. As to what the dress ruling is now, he hints that a compromise solution has been reached between the warring factions. “The decision about informal dress will be decided on a case-by-case basis at a department’s discretion. For instance, my boss will let us wear smart casuals, unless we meet clients, in which case we should wear normal business attire. As for me, I’ll continue to wear a suit anyway. It puts me in the right frame of mind for work.” Rupert Gordon-Walker

Poor Korea moves

“Let me appeal to you not to miss this chance to finally grab at a superb investment opportunity,” begged Kim Jong U, North Korea’s new economic supremo, during a 12-day, four-city tour of Japan.

The audience of stony-faced cadres of the pro-Pyongyang association of Korean residents in Japan sat politely through a promotional video for a zone of 300 square miles (775 square kilometres) in north-east Rajin-Sonbong, close to the borders with China and Russia.

Foreign investment would of course not be welcome anywhere else, but within this area capitalist viruses would be given free rein to flourish. “You can rest assured that the state will not interfere in legitimate economic activities,” Kim said. “Even offshore banking business is open to potential investors.”

A hard sell was certainly needed. The entire zone has a population of only 140,000, and virtually nil infrastructure. The trip from Pyongyang takes 22 hours. Another expert, Kim Su Yong, professor of economics at Kim Il Sung University, told the meeting coolly that “$4 billion” would have to be spent on infrastructure.

Professor Kim piled on the pressure. ING, he declared, had spent “$30 million on a headquarters in Rajin-Sonbong and an office in Pyongyang”. Keith Chiddy, the new general manager for ING’s joint venture North East Asia Bank in North Korea, was startled to hear this. ING has only risked capital of Dm3 million ($2 million), which it keeps banked in Europe, and none of its staff have ever visited Rajin-Sonbong, where an ING presence does not exist.

The Unido (UN Industrial Development Organization) brochure boasts that “Boeing, Chrysler, GM, Siemens, Alcatel and Erikson have all looked at opportunities within the zone”. Good try, that: unfortunately, not one of these has put in any money.

The advertised transport links to Russia were another surprise, as passenger services were ended about 10 years ago.

One wonders what the late Great Leader would think of Unido’s main pitch for the zone ­ cheap labour. “Wages are less than a third of those in southern China’s coastal zone … The minimum wage is just $80 per month,” enthused the brochure. “You also get more for your money. The working week is still six days.”Peter McGill

Heavyweight denials

Doth Inkombank protest too much? Russia’s fifth largest bank, and its president Vladimir Vinogradov spent an otherwise jubilant July complaining of the “mudslinging” of unnamed competitors who asserted that it may have liquidity problems.

Heavyweight support followed. Russian Bank Association head Sergei Yegorov stood by Vinogradov at a July 11 press conference, and promised that the whisper campaign would be scrutinized by the association’s ethics committee. Central Bank deputy director Alexander Khandruyev further decried it as a “mean trick”, while Moscow mayor Yuri Luzhkov implored depositors to ignore the “mendacious articles in the media”.

In fact, the concern about Inkombank was not entirely scurrilous. A draft of a central bank audit leaked to the press found “a real threat that the bank will not fulfill its obligations to clients, depositors and creditors”. But this conclusion was overruled at central bank headquarters.

This difference of interpretation can only be explained by a disagreement over the value of Inkombank’s fixed assets, particularly real estate, which under Russian accounting rules count as capital.

But ­ typically for Russia ­
the affair has a juicier political underpinning. Inkombank chairman Vladimir Groshev has apparently caught the ear of General Alexander Lebed, and is openly angling for appointment as the security council chief’s economic deputy. In the midst of the rumour fracas, Inkombank found time to announce that it would create a $5 million fund to fight organized crime and corruption, Lebed’s famous pet peeves.

“This is a political battle,” commented Valery Mironov, chief of research at the Moscow brokerage C&A. “Competitors who want to stop Groshev are behind the talk.”

A still murkier interpretation gaining an uncomfortable level of credence around town is that Vinogradov, an ethnic Russian, came under attack from a cabal of Jewish bankers led by Mikhail Khodorkovsky of arch-rival Menatep. This kind of rumour helps nobody.Craig Mellow

Trading the floor’s use

The buildings that house Europe’s stock exchanges have always been rather more grand than the volumes of business transacted there. Oslo boasts a mock-Grecian temple, while the Milan bourse rattles around inside a neo-Stalinist fortress. (Visitors have to go through a sinister ritual of handing in their passports.) But now that electronic trading is installed in many European bourses, stock exchanges are facing the ticklish problem of how to occupy their empty trading floors.

Brussels has come up with an ingenious solution ­ it’s allowing one of its larger members, the Belgo-Dutch Fortis group, to host concerts in the building. “They seem convinced that the acoustics are right,” says Anne Vleminckx, one of the managing directors at the bourse. Vleminckx is also negotiating a deal with a Belgian chamber ensemble, I Fiamminghi, which would like to hold 10 concerts there every year. “It’s a service to our members and a way to get people in and tell them that the stock exchange still exists,” she explains.

The Stockholm Stock Exchange is also using its space to provide entertainment. Bourse chairman Bengt Rydén allows a well-known Swedish opera singer to rehearse on the redundant floor. In return he gives occasional free concerts to members and their guests.

Frankfurt, on the other hand, can’t bear to abandon the past. Once physical trading ceases in a couple of years, it’s thinking of converting its large trading floor into a museum of open outcry. Laura Covill