14
CHAPTER 8 PORT GOVERNANCE IN TURKEY Ersel Zafer Oral, Hakki Kisi, A. Gu¨ldem Cerit, Okan Tuna and Soner Esmer ABSTRACT Turkey is located between Asia and Europe and attracts attention with its economic development. Turkey’s landbridge position in north–south and east–west transportation means that ports are of vital importance to the efficiency of logistics activities of the country. Although Turkey has a strategic position in terms of logistics and shipping, its approximately 160 ports do not enjoy the usual benefits of ports. The ports and piers can be classified in terms of whether they are operated by public sector, affiliated sector, regional municipalities or the private sector. This paper focuses on the Turkish port management and administration system and the possi- bilities for applying good governance in Turkish ports during the current process of privatization of public ports. It concludes that the privatization process has not been completed yet and there are many legal and practical issues to be resolved. 1. INTRODUCTION Turkey is located at the crossroads of the trade between Asia and Europe and encircled by the Black Sea, the Marmara Sea, the Aegean Sea and the Mediterranean Sea. It has borders with Georgia, Armenia, Azerbaijan Devolution, Port Governance and Port Performance Research in Transportation Economics, Volume 17, 171–184 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0739-8859/doi:10.1016/S0739-8859(06)17008-0 171

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CHAPTER 8

PORT GOVERNANCE IN TURKEY

Ersel Zafer Oral, Hakki Kisi, A. Guldem Cerit,

Okan Tuna and Soner Esmer

ABSTRACT

Turkey is located between Asia and Europe and attracts attention with its

economic development. Turkey’s landbridge position in north–south and

east–west transportation means that ports are of vital importance to the

efficiency of logistics activities of the country. Although Turkey has a

strategic position in terms of logistics and shipping, its approximately 160

ports do not enjoy the usual benefits of ports. The ports and piers can be

classified in terms of whether they are operated by public sector, affiliated

sector, regional municipalities or the private sector. This paper focuses on

the Turkish port management and administration system and the possi-

bilities for applying good governance in Turkish ports during the current

process of privatization of public ports. It concludes that the privatization

process has not been completed yet and there are many legal and practical

issues to be resolved.

1. INTRODUCTION

Turkey is located at the crossroads of the trade between Asia and Europeand encircled by the Black Sea, the Marmara Sea, the Aegean Sea and theMediterranean Sea. It has borders with Georgia, Armenia, Azerbaijan

Devolution, Port Governance and Port Performance

Research in Transportation Economics, Volume 17, 171–184

Copyright r 2007 by Elsevier Ltd.

All rights of reproduction in any form reserved

ISSN: 0739-8859/doi:10.1016/S0739-8859(06)17008-0

171

ERSEL ZAFER ORAL ET AL.172

(Nakhichvan) and Iran to the east, Bulgaria and Greece to the west, Syriaand Iraq to the south and Russia, Ukraine and Romania to the north. Thearea of the country is 814,578 km2 and the population approximately 70million. There are about 160 ports along its 8,300 km of coastline.

The Mediterranean Sea is the main transportation corridor between Far-East Asia and Europe. Gioia Tauro and Algeciras are the most importanthub ports in the Mediterranean Sea (General Director of Railways, Portsand Airports Constructions (CRPA), 2005a). Haifa, Damietta and Piraeusare the main ports in the region close to Turkey. The most importantMediterranean gateway ports to Europe are Genoa, Barcelona and Valen-cia. In the Eastern Mediterranean and Black Sea regions there are no sig-nificant gateway ports.

At present, the weight of the demand and the privileged location of portssuch as Gioia Tauro, Algeciras or Cagliari mean that the majority of hubports are located in the Western Mediterranean. However, the principalhubs are likely to change, given that the Eastern Mediterranean is expe-riencing far greater growth than the Western Mediterranean. It is foresee-able that this tendency will be consolidated as the development of Turkeyand the Balkan countries advances and commercial exchanges between thecountries of the Near East are deregulated (CRPA, 2005b).

This chapter attempts to define port governance system in Turkey duringthe current process of privatization of public ports.

2. AN ANALYSIS OF TURKISH PORTS FROM THE

PERSPECTIVE OF PORT COMPETITION

With globalization, good port governance has gained importance due tostrong competition among the ports. Port governance should be taken as akey issue for the advancement of port competitiveness (Chlomoudis & Pal-lis, 2004). From a historical point of view, port governance in Turkey can beclassified into three main periods: a nationalization period, a period of bothpublic and private port operations and, most recently, a privatization periodduring which the government is withdrawing from port operations. How-ever, from the administrative point of view, the existing ports in Turkey areclassified into four groups: public, municipal, affiliated and privately ownedports.

Turkey’s current port policy is supported by legislation such as Law 618(ports, dated 1925), Law 815 (cabotage, dated 1926), Law 3621 (coasts,dated 1990) and Law 4046 (privatization). The Undersecretariat for

Fig. 8.1. Location of the Main Ports in Turkey.

Port Governance in Turkey 173

Maritime Affairs (UMA) oversees ports in its role as the national maritimeadministration.

Municipal ports in Turkey can be considered as negligible. They do notplay an important role in the overall marine transportation of Turkey be-cause of their low share of cargo throughput. Fig. 8.1 shows the major portsin Turkey.

Turkey has influence in the region that includes the Middle East, EasternMediterranean, Black Sea, the Balkans and Central Asian countries, namelyTurcic countries. Turkey has strong economical and cultural relationswithin the region, so it has a vision of ports as part of its role in global trade.In this context, Turkey plans that the North Aegean port in Candarli, in thenorth of Izmir, will be a regional container hub port. Also, some foreign andnational private companies are constructing high-capacity container termi-nals close to Istanbul.

The final report of a study detailing a nationwide port developmentmaster plan for Turkey analyses the existing container ports as follows(Overseas Coastal Area Development Institute of Japan (OCADIJ), 2000):

Istanbul (container ports in the Marmara Sea): Container ports in the Mar-mara Sea cannot be major competitors in Eastern Mediterranean transport.They can certainly act as feeder ports and if a container port in the MarmaraSea can collect a certain amount of local container cargo, the port can pos-sibly attract large container vessels to call at the port directly (CRPA, 2005a).

ERSEL ZAFER ORAL ET AL.174

Izmir (container ports in the Aegean Sea): Izmir port is in a good locationbetween the Eastern Mediterranean and the Black Sea and can be a majorcompetitor in both. Izmir is the third largest city in Turkey and an impor-tant business centre. The port has a vast agricultural and industrial hinter-land. It is the port for the Aegean Region’s industry and agriculture andplays a vital function in the country’s exports. All different types of com-modities and cargo groups are handled in the port and port expansionstudies continue. The port is also connected to the national railway andhighway network.

Mersin Port (container ports in the Mediterranean Sea): Mersin Port canbe a major competitor in Eastern Mediterranean transport (CRPA, 2005a).It is the main port for the Eastern Mediterranean Region’s industry andagriculture and a gateway for the Turkish provinces of Gaziantep andAdana as well as for Iraq and Iran. The port’s rail link and its easy access tothe international highway make it an ideal transit port for trade to theMiddle East. With its modern infrastructure and equipment, efficient cargohandling, vast storage areas and its proximity to the free trade zone, Mersinis one of the most important ports in the Eastern Mediterranean. Thefacilities at the port handle general cargo, containers, dry and liquid bulkand Ro–Ro.

Turkish ports serve the national economy, but they have insufficient ca-pacity in terms of infrastructure, superstructure, equipment, etc. for transitcargoes, so they hardly compete with the regional ports. The major ports inTurkey used to be operated within a monopolistic regime until the priva-tization of some of them. Currently, privatization administration of Turkeyis very keen on fair competition (Table 8.1).

Municipal ports, such as Ayvalik, serve the tourism and passenger mar-ket, although they also handle some bulk and general cargo. Municipalports are comparatively small-scale and are operated by the municipalitieswhere the ports are located. Affiliated ports are owned and operated byeither large state-owned or private industrial companies and these portsusually serve the tramp and bulk market. The last group is made up ofprivately owned ports; most of these primarily handle their own cargoes butdo serve other customers.

Private ports have specialized terminal operations that usually serve thebulk and tramp market. Some are occupied with the liner market by servingcontainerized cargo. The private ports/terminals are in a rather competitiveposition compared with publicly operated ports. Generally, they prefer tospecialize and operate more efficiently. The decision-making process in pri-vate ports is much quicker and more efficient at investing, especially in cargo

Table 8.1. Major Ports in Turkey.

Ports Length (m) Depth (m) Handling

Capacity (Ton/

Year)

Ships (Ship/

Year)

Storage Capacity (Ton/Year) Container

Capacity

(TEU/Year)

Open Closed

Haydarpasa 2,765 (–6,–12) 6,488,300 2,651 471,360 362,384 264,000

Derince 1,132 (–4,5–15) 1,910,900 567 2,951,760 200,000 –

Samsun 1,756 (–6,–12) 2,284,100 1,130 8,556,720 192,304 –

Mersina 3,180 (–6,–14,5) 5,510,800 3,052 8,109,024 562,992 203,376

Iskenderuna 1,427 (–10,–12) 3,223,600 640 8,991,120 294,320 –

Bandirma 2,788 (–10,12) 2,636,100 4,277 1,868,280 144,000 –

Izmirb 2,959 (–4,–12) 4,931,600 3,635 565,920 377,648 265,728

Marportc 2,000 (–14,5) 409,000 900,000

Source: Turkish Chamber of Shipping (2004), www.arkas.com.traPrivatized.bUnder process of privatization.cPrivate.

Po

rtG

overn

an

cein

Tu

rkey

175

ERSEL ZAFER ORAL ET AL.176

handling equipment. The management style of the private port sector hasminimized internal bureaucracy.

While some private ports adopt customer relationship management tech-niques in their relations with port users, this does not seem to be a practiceof public ports. The main concerns of public ports are social and economicissues. Their principal aims are to increase the economic benefits of the portfor the nation or region and to cooperate with labour unions in seeking toachieve this. While private multipurpose and container ports are much morefocused on value-added services and a non-union labour force to maximizetheir profits, the public port enterprises have operated ports by involvingstrong labour unions in the issues. After privatization, the labour unions arerather weakened or have been eliminated.

The Overseas Coastal Area Development Institute of Japan (OCADIJ,2000) analysed the relationship between port administration, port manage-ment and the institutional framework and identified the following fourpolicies:

1.

Autonomous port administration 2. Flexible port management 3. Financial independence 4. Port development in liaison with regional development

Although the fourth development policy has always been implemented inliaison with regional and national authorities, the first policy is not exercisedin Turkey at all. On the other hand, the second and third policies are ex-ercised only by the private sector.

The OCADIJ (2000) made the following two recommendations with re-spect to the importance of Turkish ports increasing the productivity of theircargo handling and service levels: (1) effectively use existing facilities and (2)be more competitive.

As a result of this analysis, it is observed that there is a fast transition andunpredictable result for the port users after the privatization process, andTurkey has not set a specific model to fit its nature and needs. For instance,the privatization contracts of Port of Mersin and Port of Antalya havedifferent content and logic, in terms of articles concerning operation peri-ods, investment obligations, increasing cargo throughputs, etc. Since publicports cannot be flexible, do not have financial independence, and are notfocused on clear goals on delivering services, they have become inefficient.Inefficiency has also been caused by political interference in employmentissues and the high turnover rate in top managerial positions.

Port Governance in Turkey 177

3. PORT-RELATED BODIES

The main port-related governmental organizations can be summarized asfollows: Prime Ministry, State Planning Organization (SPO), Undersecre-tariat for Maritime Affairs (UMA), Ministry of Transport (MOT), Ministryof Health, Ministry of Public Finance, Ministry of Interior, Ministryof Public Works and Settlement (MPWS), Ministry of Industry (MOI),Ministry of Agriculture, Ministry of Environment, General Directoratefor Construction of Railways, Seaports and Airports (CRPA), State Eco-nomic Enterprises such as Turkish State Railways (TSR) and TurkishMaritime Organization (TMO), municipalities, customs, immigrationpolice, etc.

The relationship between governmental organizations is shown inFig. 8.2, and the functions and responsibilities of the main port-relatedorganizations are described below.

The Prime Ministry and the SPO consider the total balance of investmentin Turkey and judge the feasibility of specific projects. The MOT coordi-nates all the development of ports in Turkey and has responsibility for

Republic of Turkey Prime Ministry

SPO

Concerned Ministries

UMA MOT MOI

CRPA TSR

IPOSOCTMO

Fig. 8.2. Relationships between Governmental Organizations. Abbreviations: SPO,

Prime Ministry and the State Planning Organization; UMA, Prime Ministry and the

Undersecretariat for Maritime Affairs; MOI, Ministry of Industry; MOT, Ministry

of Transport; TMO, Turkish Maritime Organization; IPOSOC, Industrial Ports of

State-Owned Companies; CRPA, General Directorate for the Construction of Rail-

ways, Ports and Airports; TSR, Turkish State Railways.

ERSEL ZAFER ORAL ET AL.178

setting the port tariff of TSR ports. The MOI controls and coordinates theindustrial ports of state-owned companies (IPOSOC). The Ministry ofPublic Finance funds port investments and collects taxes. The Ministry ofHealth is responsible for the control of, and measures related to, publichealth (quarantine, patent, etc.). The Ministry of Agriculture is responsiblefor fisheries and approves new port investments and development. TheMinistry of Environment approves environmental impact assessment studiesof ports. The Ministry of the Interior is responsible for the police, immi-gration, etc. The CRPA undertakes all planning, research, constructionand maintenance work on ports belonging to the public and affiliated sec-tors. The Prime Ministry and the UMA coordinate political, economic andlegal aspects concerned with international maritime issues according to na-tional policy. The UMA used to set the port tariff of TMO ports. Suchpublic ports are not operated by TMO any longer since they have beenprivatized. It is the UMA that acts as the maritime authority in Turkey andadministers the maritime vessel traffic system. This relates to aspects such asthe entry and exit of ships into and out of port and the regulation of ship-ping and navigation, etc. MPWS prepares territorial application plansand defines the land use principles for all industrial sectors, including thetransportation sector. State Economic Enterprises, such as the TSR andTMO, operate, develop and maintain owned ports. The TSR also under-takes miscellaneous transportation by providing connections between rail-ways and ships and establishing and operating the required superstructure,such as warehouses, silos, fuel facilities, etc. TMO’s additional responsibil-ities were to provide and undertake loading and discharging operationsby constructing and establishing the required facilities, to provide someservices for ships, such as fresh-water, fuel oil, etc., and to construct andoperate the required superstructure facilities at its owned ports. Municipal-ities are concerned with city–port relations and environmental impactsand they provide some services to ports such as fresh-water, garbage col-lection, etc.

Weak coordination and conflicts of authority may happen from time totime among these related bodies. For example, deepening the draft in thePort of Izmir has always been a matter of conflict and some infrastructureinvestment has also experienced similar problems. There is a complex systemof involvement in the investment, operation and administration process.A single issue might be a concern of at least two or three bodies affiliatedwith different ministries. This situation causes chaos in the decision-makingprocess and coordination. Needless to say, inefficiency arises in the portgovernance process in Turkey.

Port Governance in Turkey 179

4. PORT INVESTMENT, DEVELOPMENT

AND MANAGEMENT

The coastline of Turkey is legally public property owned by the state, and itsuse has to be such that it contributes to the public interest. So long as thecoastline is open for public use, the construction of port facilities such aswharves, piers, breakwaters, etc. can only be constructed by permissionfrom central government authorities.

The CRPA undertakes the development of ports. It formulates develop-ment plans, constructs port infrastructure for public and municipal portsand performs some maintenance. All of the port development projects, in-cluding those in affiliated and private ports, are controlled by the followingthree departments of CRPA: the Planning and Project Department, theHarbour Survey and Design Department, and the Harbour ConstructionDepartment.

The Ministry of Transport proposes port development projects preparedby the CRPA to the SPO. The SPO considers the total balance of investmentin Turkey by prioritizing projects, as well as judging the feasibility of specificconstruction projects. When they are approved by the SPO in the Five-YearDevelopment Plan, the Ministry of Finance finances the investment. In thecase of private ports and industrial enterprises, they are constructed andfinanced by affiliated institutes. The CRPA only approves their projects andcontrols all construction.

In general, prospective investors, including all private and public insti-tutions or individuals who construct marine structures such as berths,docks, shelters, mooring facilities, piers and breakwaters must get approvalfrom the relevant government organizations, including the CRPA. First, thegovernor of the province reviews the investment plans containing all thedetails and properties of the structures, as well as reports, maps and otherrelated documents, on the background and local information of the area.Then, the MPWS examines the proposal in terms of the general and regionalplanning principles, and general settlement plan decisions. The Prime Min-istry UMA, MOT and Ministry of Environment are also involved in thisprocess. After obtaining approval from the MPWS, the CRPA examines theimplementation projects from a technical point of view. The investors goahead with construction with full responsibility and control still lying withthe CRPA. Following the completion of construction, the Prime MinistryUMA gives the investors permission to operate the new facility.

The ports of Turkey are classified into four groups according to an op-erational point of view: public ports, municipal ports, affiliated ports and

Table 8.2. Administrative Classification of the Turkish Ports.

Operators Classification Total Length of Ports

and Pier (m)

TSR ports 7 Public 16,007

TMO ports 7 Public 2,623

Industrial ports of state-owned

companies

37 Affiliated 30,662

Municipal ports 45 Regional municipalities 8,875

Private sector ports 51 Private sector 22,094

Privatized TMO ports 13 Private sector 9,481

Total 160 89,742

ERSEL ZAFER ORAL ET AL.180

privately owned ports. The main public ports are operated by TSR and theTMO. Administrative classification of the Turkish ports is shown in Ta-ble 8.2. The TSR manages ports connected to the railway system. Thesemajor public ports are general-purpose ports under the control of the MOT,which approves the budgets and annual programmes and plans of both TSRand TMO. The TMO was privatized as TMO Inc. Co. as a state enterprisein 1995.

TSR ports are managed by the Ports Department from its headquarters inAnkara, the capital of Turkey. The Ports Department is responsible for themanagement, the overall planning and functioning of the ports, and theircoordination. The CRPA coordinates with the TSR headquarters in for-mulating port development plans. Each individual port has a Port Managerwho is mainly in charge of operations, including all services to ships andcargoes, using their own labour and equipment. Each port also consults andadvises headquarters in planning its port development. The ports operatedby TSR are shown in Table 8.3.

TSR ports procure superstructure (warehouses, CFS, cranes, and cargohandling equipment, etc.) and engage in operations in their own right.However, cargo handling and marine services are also provided by privatecompanies under the control of port management bodies. TSR ports pro-vide marine services (pilotage, tugs, mooring, fresh-water supply and bun-kering). For example, in the Port of Izmir, pilotage, tugs and mooringservices are provided by TMO, which also carries out the pilotage service inmany of Turkey’s ports. Table 8.4 shows the privatized ports of TMO.

Affiliated ports are special industrial ports and industrial enterprises,which are state-owned or private companies. These ports fall under thecontrol of the MOI and are mostly confined in purpose to the particular

Table 8.3. Distribution of the Main Cargo Groups Handled at the TSRPorts (Tons).

Ports Year General Cargo Container Dry Bulk Liquid Bulk Total

Haydarpasaa 2001 2,540,788 2,202,474 45,750 0 4,789,012

2002 2,769,618 2,338,146 5,121 2,073 5,114,958

2003 3,203,175 2,503,643 16,085 65 5,722,968

2004 3,320,515 3,128,689 8,421 306 6,457,931

Mersinb 2001 1,609,420 2,982,231 2,977,333 6,059,698 13,628,682

2002 1,004,885 3,858,623 3,073,544 5,825,813 13,762,865

2003 1,102,223 5,128,919 3,128,805 6,116,431 15,476,378

2004 1,064,862 5,924,054 2,679,438 7,514,939 17,183,293

Iskenderunb 2001 262,989 317 465,350 968,369 1,697,025

2002 223,185 303 492,317 886,200 1,602,005

2003 468,848 3,646 557,331 1,226,892 2,256,717

2004 173,214 8,282 630,519 1,421,583 2,233,598

Samsuna 2001 1,005,852 11,941 1,523,142 3,000 2,543,935

2002 838,999 7,880 1,750,028 13,988 2,610,895

2003 619,153 0 2,127,347 22,236 2,768,736

2004 756,183 0 2,318,711 37,340 3,112,234

Derince 2001 406,840 4,988 127,913 8,479 548,220

2002 692,529 5,232 400,042 51,172 1,148,975

2003 765,798 15,667 603,025 67,149 1,451,639

2004 1,090,900 11,184 799,990 65,377 1,967,451

Bandirmaa 2001 183,437 14,176 2,477,019 304,458 2,979,090

2002 133,702 8 2,080,954 145,026 2,359,690

2003 160,529 0 2,399,140 164,207 2,723,876

2004 768,797 284 2,290,429 183,750 3,243,260

Izmirc 2001 496,005 4,671,425 2,986,219 272,420 8,426,069

2002 567,725 5,439,787 3,457,351 187,851 9,652,714

2003 614,348 6,478,213 3,765,593 251,445 11,109,599

2004 673,254 7,659,365 3,947,449 220,197 12,500,265

Total 2001 6,505,331 9,887,552 10,602,726 7,616,424 34,612,033

2002 6,230,643 11,649,979 11,259,357 7,112,123 36,252,102

2003 6,934,074 14,130,088 12,597,326 7,848,425 41,509,913

2004 7,847,725 16,731,858 12,674,957 9,443,492 46,698,032

2005d 3,533,691 7,298,559 4,492,409 3,348,198 18,672,857

Source: Turkish State Railways (2005).aPublic ports.bPrivate ports.cUnder process of privatization.dAs of the end of May 2005.

Port Governance in Turkey 181

Table 8.4. The Privatized Ports of Turkish Maritime Organization(TMO).

Ports Length Depth Ton/Year Ships Storage (Ton/Year)

Alanya 239.00 (�6,–10) – 240 –

Antalya 1,900.00 (–4,–10) 3,338 2,975 4,714

Marmaris 462.00 (–12) – 1,460 –

Gulluk 358.90 (–10,–12) 3,750 240 –

Kusadasi 920.12 (–11) – 2,400 –

Ces-me 480.00 (–7.5,–10) – 1,060 –

Dikili 178 (–6,–8) 500–550 200–220 –

Gokceada 500.00 (–5,–6) 312 104 –

Darica 25.00 (4–5) – – –

Canakkale 100.00 (–6,–6.5) 300 104 –

Lapseki 200.00 (–6,–6.5) 100 100 –

Tekirdag 1,014.00 (–4,–9) 2,900 1,050 361

Istanbul 1,120.00 (–6.5,–10) – 5,250 –

Kabatepe 320.00 (–6,–8) – – –

Sinop 197.20 (6.4,11.95) – 250 400

Ordu 269.00 (–8,–9) 865 350 1,300

Giresun 1,022.00 (–8,–10) 1,394 1,575 1,375

Trabzon 1,525.00 (2.5,10) 3,839 2,839 3,193

Rize 130.00 (–5) 529 140 –

Hopa 1,145.00 (4.5,10) 1,394 1,425 1,228

Total 12,124.63 14,788 20,700 12,571

Source: Turkish Maritime Organization Inc (2005), Turkish Chamber of Shipping (2004).

ERSEL ZAFER ORAL ET AL.182

needs of industrial concerns. These ports are generally considered to bequasi-entrepreneurial administrations, independent and free from politicalpressure and functioning on an entrepreneurial basis, having independentbudgets. Some state industrial enterprises are under the control of the Pri-vatization Administration, as privatization has been progressing recently.The construction of infrastructure at public ports is met from the nationalbudget, while the maintenance of these structures is undertaken by the re-spective port management bodies at their own expense. Superstructure andcargo handling facilities are established by port management bodies and/orprovided by operating companies.

Municipalities manage municipal ports. These public ports are compar-atively small and limited to relatively small volumes of coastal traffic servingthe local needs of provincial towns. Some municipalities manage ports withtheir own port management division, but this does not involve large-scaledevelopment.

Port Governance in Turkey 183

Privately owned ports are constructed and managed by the private sectorafter obtaining the permission of central government. Small-scale privatesector port development has taken place in the region around the MarmaraSea. These small-scale port developments are based on private capital. Someof these ports were privatized in the last 10 years, having previously be-longed to the TMO.

The ports operated by the TSR, namely Bandirma, Izmir, Samsun, Der-ince, Mersin and Iskenderun, are scheduled to be privatized. However, pri-vatization will be carried out by a method that does not involve the transferof the title of the ports, such as the transfer of operational rights, lease orother management method. The decision of the Supreme PrivatizationCouncil sets forth that the privatization will be finalized within 12 months(Privatization Administration of the Republic of Turkey, 2005).

With the amendment made to the Privatization Law by Law 5189, foreignentities (through a Turkish subsidiary) can also acquire the operationalrights of a port. For example, in 2005, PSA gained the operational rights toone of the major ports in Turkey. Pursuant to Law 815 (on DomesticShipping), pilotage services can only be carried out by Turkish citizens.

5. DISCUSSION

An overwhelming amount of cargo handling and cargo transfer in seabornetrade in Turkey is carried out at public ports. However, major public portswith the highest port throughput in Turkey appear not to be operated effi-ciently. Politicians and bureaucrats interfere in the port industry in order tomeet both self-serving political objectives and industrial objectives. Bu-reaucracy is always a barrier. From the point of view of the port business,this is neither a flexible nor a workable system, as centralization creates agreat deal of difficulty with respect to decision-making. The central planningof the ports means that some specific and special needs are missed. Em-ployment has always been exposed to political interference, but authorityand responsibility are not well defined.

The private ports in Turkey have physical deficiencies in cargo handlingequipment and storage yards. They have inadequate financial resources anddifficulties in investing in port development. Most private ports located inthe Marmara region fall outside the coordination provided by national portpolicy and are in destructive competition with each other. This is reflected intheir very low port tariffs and in the fact that they have no idea what otherports are doing or investing in.

ERSEL ZAFER ORAL ET AL.184

Industrial enterprise ports are, of course, very important for their plants’industrial activities, but they are not a significant presence in the port sector.It is useless to criticize their way of administration and operation, however,even though their capacity utilization rates have always been questionable.

The Turkish Competition Authority, Ministry of Transport, Ministry ofFinance and the Privatization Administration of Turkey are among the re-lated bodies for privatization. However, there has never been a single supremeorganization in Turkey to coordinate port investments, port development andport competition, especially for the port privatization period. As far as theauthors are concerned, there should be an integrated supreme body to co-ordinate all the ports according to a national port policy that is compatiblewith EU transport policy. Such a coordination entity can comprise repre-sentatives of port operators, port users, municipalities, related governmentagencies like CRPA, Customs, Prime Ministry Undersecretariat for MaritimeAffairs, NGOs like the Turkish Chamber of Shipping and universities.Another area of coordination is required for participation of local authoritiesand NGOs in the port administration for good governance. Unless theprivatization practices consider this vital concern, the main drawback of theprivatization process will emerge, resulting in serious local conflicts. It is toosoon to assess the outcome of Turkey’s privatization programme but, forthese reasons, it is too early to consider the future as promising.

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