Rebuilding hopes after human tragedy
Last month an earthquake brought Turkey's economy to a temporary standstill. It was already in the throes of a recession. Now it's time to rebuild, take advantage of extra sympathy from the IMF and international capital markets, and perhaps revitalize and reform the country in a way that wasn't politically possible before August 17. Metin Munir reports.
The earthquake on August 17 in Turkey's most populous and industrial region was perhaps more predictable than some of the country's recent political and economic upheavals. Seismologists had estimated that there was a 12% chance of an earthquake occurring south of Istanbul in the 30 years from 1996 to 2026.
That didn't diminish the shock which caused extensive damage in the provinces bordering the Sea of Marmara, including Istanbul and Izmit. However, it took its toll more on human life, private households and infrastructure than on the industrial base. Central bank governor Gazi Ercel estimated the repair cost of the damage (excluding private sector plants) at $5 billion to $7 billion. Erkut Yucaoglu, chairman of the Turkish Industrialists' and Businessmen's Association (Tusiad), put earthquake damage closer to $20 billion. Merrill Lynch said that while it was difficult to gauge the economic cost "preliminary damage reports argue that the negative economic impact will be significant. The direct costs could easily exceed $5 billion". Merrill Lynch guessed that the government might be hard pressed to fund rebuilding as it already pays "punishingly" high borrowing rates.
Speaking to Euromoney Ercel said that "while the loss in human terms is catastrophic and the pain is inestimable, the material damage we can bear.