Encouraging U.S. sees Turkey OurWorld · Commerce in Russia (AmCham). “Political stability, fiscal disci-pline, and three successive years of constant GDP growth—in-cluding a

■ RUSSIA’S economy has seentremendous growth over the lastseven years. American compa-nies, large and small, haveentered the Russian market,while Russian firms in turn areon the lookout for opportunitiesto export or set up retail opera-tions in the United States.

“The investment climate inRussia has significantly im-proved during the Putin years,”says Andrew Somers, Presidentof the American Chamber ofCommerce in Russia (AmCham).“Political stability, fiscal disci-pline, and three successive yearsof constant GDP growth—in-cluding a stunning 6.4% GDPgrowth for the first quarter of2003—testify to Russia’s emer-gence as a strong investmentcandidate.”

According to Mr. Somers,American companies operatingin the Russian marketplace areexperiencing strong annualgrowth in revenues, market share,and profit margins, with the Russ-ian operations of some U.S. glob-

al companies outperforming allother units worldwide.

He sees the development ofRussia’s manufacturing indus-try and membership of the WorldTrade Organization, which heexpects by the end of 2004, as“absolutely crucial” to Russia’slong-term economic growth.

Forecasts for growth havebeen revised considerably up-wards as a result of oil pricesstaying high during the firstquarter of the year. “Our origi-nal forecast was an increase inGDP of 4.6%,” says ArkadyDvorkovich, Deputy Ministerof Economic Development and

Growth is expected to exceed5% this year. Minister of Indus-try and Trade Ali Coskun says thegoal is to reach an annual growthrate of 7% within the next fewyears. Bureaucratic obstacles toinvestment are being abolishedand the privatization of state-runenterprises is continuing.

“We are entering a new erawith positive trends in terms offoreign investments, productioncapacity, and exports,” the Min-ister declares.

Süreyya Serdengeçtí, Gover-

Gabon is recognized as the re-gional pacesetter.

President Omar Bongo hasbeen Gabon’s head of state since1967, initially within what wasessentially a one-party system.Since the 1990s, multi-partydemocracy has developed, butMr. Bongo has maintained hispopularity with voters, makinghim the second longest servingruler in Africa.

By Central African standards,Gabon is extraordinarily politi-cally stable. Moreover, in recentyears, President Bongo has de-

veloped a role for himself as a me-diator in conflict situations in oth-er parts of the continent.

Gabon is a keen proponent ofsub-regional integration, recog-nizing that a country with a popu-lation of under one-and-a-halfmillion cannot hope to survive inisolation in the modern world, evenwith substantial reserves of oil. In-deed, Gabon realistically sees itselfas becoming the transport and tech-nological hub of Central Africa.

Per capita income, in excess of$4000 a year, is more than 10 times

OurWorldThis supplement to USA TODAY was produced by United World Inc.: 3rd Avenue 350 PMB #244 New York N.Y. 10010 - Tel: 212.286.8117 - Fax: 212.286.1984 www.unitedworld-usa.com

NOVEMBER 17, 2003

Russia Page 8Keeping economic reform on the agenda andremoving barriers to trade and investment

Turkey Page5

U.S. sees Turkeyas “a potentialeconomicpowerhouse” and moves tostrengthen links

Encouragingprivate enterprise and foreigninvestment todiversify the oil-led economy

Gabon Page 2

Our World Insert is produced by United World. USA TODAY did not participate in its preparation and is not responsible for its content

■ STRADDLING the equator,the Central African state of Gabonis one of the most prosperouscountries in sub-Saharan Africa.Traditionally a close ally of itsformer colonial power, France, ithas recently been diversifyingand strengthening other diplo-matic and economic partnerships,from Washington to Beijing, in aspirit of political non-alignmentand the pursuit of economic andsocial development.

After independence in 1960,Gabon forged links with the Unit-ed States largely on the basis ofGabon’s substantial oil exports.However, the bilateral relation-ship has been blossoming re-cently in other ways, for examplein the promotion of conserva-tion strategies for the CongoBasin tropical forests, in which

■ JUST over a year after a land-slide general election victory gaveTurkey its first single-party gov-ernment in 15 years, the countryis firmly reestablished on the pathof economic growth.

Prime Minister Recep TayyipErdogan’s AKP administration iscommitted to the IMF-backed fi-nancial discipline and structuralreforms that have put the coun-try back on track, following adevastating financial crisis in2001. Strict monetary and fiscalpolicies are being adhered to, andfurther moves are being madeto strengthen a reformed bank-ing sector.

In September, the United Statesagreed to lend Turkey $8.5 billionto support the economic reformprocess and to mitigate the eco-nomic impact of the Iraq war.

OMAR BONGOPresident of Gabon

Turkey sees itself as a bridge between Europe and Asia.

The Kremlin, now at the center of a full-fledged market economy. Continued on page 2

Continued on page 5 Continued on page 8

Building up global linksand regional influence

Reforms, growth,and opportunities

Gabon RussiaAbundant natural resources and political stability have made Gabon asignificant force in Central Africa.

President Putin’sRussia is open for business and heading formembership inthe World TradeOrganizationOn the path to sustainable

growth and EU entry

Turkey With its economy back on track, Turkeyis working to achieve its long-heldambition to join the European Union

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Trade is basis of a goodrelationship with U.S.

Gabon Washington applauds Gabon’s espousal of free enterprise and effortsas a regional peacemaker

■ THE first visit to Gabon by aU.S. Secretary of State took placelast year when Colin Powell ar-rived in the capital, Libreville, de-claring that he was there “tostrengthen a relationship that is al-ready good”, and to highlight en-vironmental protection in the region.

The trip underlined the long-standing nature of friendly bilat-eral relations between the twonations. Successive U.S. admin-istrations have appreciatedGabon’s commitment to regulat-ed free enterprise as the most ap-propriate system for stimulatingeconomic growth.

In business terms, oil has so farbeen the main attraction from theAmerican point of view; the U.S.

ONE of the advantages Gabonenjoys as a result of decades ofpolitical stability is that every-one is clear what the main in-tentions of government policyare. In fact, many of them aredescribed in the National Soli-darity and Development Pact, onwhich President Bongo was re-elected in 1998.

Prime Minister Jean-FrançoisN’toutoume-Emane enumeratessome of the leading items:“Combating poverty, promot-ing social policies, cleaning uppublic finances, diversifying theeconomy, and privatizing theparastatal sector.” The ultimateaim is to improve the lives ofordinary Gabonese.

Considerableprogress has beenachieved, and thegovernment is de-termined to makefurther advances,with encourage-ment from inter-national financialinstitutions.

“We are a smallcountry, but wehave developedservices such asair transport, afairly significant banking sys-tem, the internet and so forth,”the Prime Minister says.

The privatization drive isoff to a good start with thesale of the cement company,Cimgabon. Other state-ownedbusinesses earmarked for saleinclude Air Gabon, Agrogabon,and Gabon Telecom.

“We have chosen to developa liberal economic system,” Mr.N’toutoume-Emane stresses.“This means that we are pro-moting small and medium en-terprises. Also, each year, twoprovinces are the focus of spe-cial attention, which gives us theopportunity to build new schoolsand hospitals.”

Foreign investment is beingactively sought and laws are be-

ing amended or introduced tomake the country more business-friendly. “An anti-corruption lawhas been passed, and a commis-sion against illegal enrichmenthas been set up,” Mr.N’toutoume-Emane cites.“Moreover, we have passed amining code and a forestry code.”

Adedicated Ministry has beenestablished to help in the fightagainst poverty. It has collabo-rated with the Ministry of Plan-ning in producing the povertyreduction strategy paper that hasto be submitted to the IMF andthe World Bank, as a conditionof receiving further external aid.

The growth of trade and in-vestment has a greater long-term

significance thanaid, however. TheMinister of Plan-ning and Develop-ment Programs,Casimir Oyé Mba,sees Gabon’s polit-ical stability as amajor asset in at-tracting the sort ofoverseas invest-ment that will beneeded to build upthe country’s infra-structure.

Recently, such projects havesometimes ground to a haltthrough a lack of financing,which is certainly partly attrib-utable to Gabon’s burden of debt.However, the government’s par-ticipation in counter-fundingschemes with foreign donors,such as one for the Medoumaneto Lalara highway, has helpedimprove that situation.

Sometimes, the armed forcesget directly involved in develop-ment efforts, as they have fewcombat duties to worry about.Minister of National Defense AliBongo explains,“We have orga-nized maneuvers in various partsof the country that have enabledour health department to treat thecivilian population with free con-sultations and surgical operations.”

■ AS a small country on a large continent,Gabon understands better than most the im-portance of regional cooperation. Though itsoil revenues have for a generation or more keptits per capita income levels well above thoseof its neighbors, the drive towards economicdiversification and infrastructure developmentwill undoubtedly be aided by greater regionalintegration.

Through the Central African Economic andMonetary Community (CEMAC), Gabon has aspecial relationshipwith Cameroon, theCentral African Re-public, Chad, Congo(Brazzaville), andEquatorial Guinea.These six have a com-mon currency, theCFAfranc, and a Cen-tral Bank, BEAC(Bank of the CentralAfrican States).

Philibert Andzembe,BEAC’s CountryDirector for Gabon,emphasizes the sub-region’s economicimportance. “The CEMAC countries produceoil and minerals, as well as agricultural andforestry products,” he says. “With the diversi-fication of their economies now underway, theCongo Basin forests have taken on an impor-tant environmental aspect. The zone can alsobecome a significant tourist destination.”

From 1970 to 1990, Gabon was the only oil pro-ducer in the area, and its export revenues helpedthe rest of Central Africa. The fact that the coun-try enjoyed a long period of political stability, in

stark contrast with many of its neighbors, also con-tributed to its pivotal role.

The downside was the accumulation of mas-sive external debt. Reduced oil production, cou-pled with the devaluation of the CFA franc,exacerbated the situation. Over half the country’sexport earnings are spent repaying and servicingdebt, thereby limiting resources available for sec-tors such as house-building, health, and the fightagainst poverty.

“Gabon’s debt reduces the State’s ability to bringabout diversification,”laments Mr. Andzembe.“IMF and World Bankinitiatives have helped re-lieve the debt burden forthe poorest countries, butupper middle incomecountries like Gabondon’t qualify.”

However, Gaboncould well benefit fromseveral other initiatives,including the New Part-nership for Africa’s De-velopment (NEPAD). AsPatrice Otha, NEPAD’sRegional Coordinator,

explains, NEPAD has identified several key fieldsfor program activity, including education and hu-man resources, information technology, agricul-ture, and infrastructure development.

“Gabon has great expectations for NEPAD,”he says, “All the more so because the projectsthat will be carried out will be transnational,involving between two and four countries. Soonce two or three projects have been identifiedfor the Central African region, Gabon is obvi-ously going to be involved in carrying them out.

THE REGION

also imports manganese and ex-ports heavy construction equip-ment, aircraft, and machinery toGabon.

According to Jean Ping,Gabon’s Minister of Foreign Af-fairs, Cooperation, and FrenchSpeaking Communities, otherareas, especially the environment,are also beginning to arouse in-terest on the other side of the At-lantic. “Our national parks arestarting to become well-known in

JEAN-FRANÇOISN’TOUTOUME-EMANE

Prime Minister of Gabon

Libreville, Gabon’s capital, was visited by U.S. Secretary of State Colin Powell last year.

Social development is a prime concern for NEPAD

Cooperation points the way forward

Shifting the economy away from its heavydependence on oil is a government priority.

Fighting povertyand diversifyingthe economy

the United States,” he says. “Oth-er sectors, including services andindustry, could also be developed.”

Due to oil, the United States isthe market for half of Gabon’s ex-ports. But trade is not the onlyelement of relations between thetwo countries. For example,Peace Corps volunteers have beenone visible aspect of a U.S. con-cern to assist in ensuring that thebenefits of oil-led developmentpercolate down to the population

as a whole. Washington ap-

plauds the Gabonesegovernment’s effortsto promote peace inseveral parts of Africa.Gabon has been in-volved in mediationefforts in Angola, theCentral African Re-public, Chad, Congo(Brazzaville), and theDemocratic Republicof Congo (formerlyZaire).

Obviously, both thesecurity and prosper-ity of the CentralAfrican sub-region areof particular concernto Libreville. “Gaboncannot remain an is-land of peace withinan ocean of blood,”Mr. Ping declares.“The President oftensays that ‘if you don’thelp put out the flames

in your neighbor's house, the firewill spread to yours.’”

The Minister stresses that peaceand stability are fundamental con-ditions for attracting foreign cap-ital and investment. “So you see,Gabon has every reason to wantthe whole African continent to of-fer all the conditions that willbring in foreign investors.”

While restoring peace in Cen-tral Africa is seen currently asthe top challenge for Gabon’sforeign policy, there are others,including achieving economicintegration in the sub-region.“Our economies are so small thatwe can only solve our problemswithin the framework of a vast,integrated sub-regional whole,”Mr. Ping argues.The third challenge that he iden-

tifies is extending good gover-nance, notably through thepromotion of democracy, andachieving greater transparency inthe way that businesses are run.

Partnerships in the region and beyondthat of the poorest African coun-tries, but income distribution isuneven. A major thrust of gov-ernment policy is to combat se-rious levels of poverty, especiallyin the interior, partly through thediversification of the economy.

Far more couldbe done in pro-cessing and trans-forming theprimary materialsthat are present insuch abundance.The services sector is also still op-erating well below its potential.Insufficient foreign investmentand the burden of debt are majorreasons for under-achievement,despite the economic diversifi-cation that has taken place so

far, but other factors include thesmall size of the domestic mar-ket, the need to develop an en-trepreneurial culture, and atendency to import consumergoods which are basically paidfor by oil.

Economic growth has tendedto reflect the fluctu-ation in world pricesfor oil, as well as thequantities of oil out-put. It is hoped,however, that withthe development of

the non-oil sector, an annualgrowth rate of around 3%—justabove population increase—willbe sustainable in the short term.

One of the greatest challengesfor Gabon, in common with itsneighbors, is how best to use both

natural and human resources toaccelerate economic and socialdevelopment. One of the mainreasons for Libreville espousingthe idea of sub-regional integra-tion so strongly is the belief thatcreating a viable macroeconom-ic environment in Central Africawill foster trade and investment,of which Gabon could be a ma-jor beneficiary.

The government acknowledgesthat the country’s financial andtax systems need to be strength-ened and reformed, so that a high-er proportion of availableresources will in future be chan-neled to key social sectors suchas education and health, as wellas to major infrastructure im-provements, especially the roadtransport system.

With the developmentof the non-oil

sector it is hoped agrowth rate of 3% will be sustainable

Continued from page 1

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JEAN PING Minister of ForeignAffairs, Cooperation, and

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Distributed by USA TODAY3 November 17, 2003 Our World

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Warmer welcome for foreign investors■ FORmany American investors,Gabon is a land that is either un-known or assumed to be a preservefor French capital. Both govern-ment and business in Gabon areeager to dispel such misconcep-tions, as well as to stress theadvantages the country enjoysover most other African nations.

It is not just natural resources thatGabon has to offer, though it hasthose in abundance. The country’sremarkable degree of political sta-bility, and relatively high standardof living, especially among the ur-ban middle class, make it an eas-ier place to operate in than someof its continental rivals.

One of the roles of Gabon’sChamber of Commerce, as out-lined by the Chamber’s President,Joachim Boussamba-Mapaga, isto get Americans over to see whatthe country is really like.

“Over the past decade, we havebeen building a type of democ-racy that has strengthened the di-alogue between various politicalactors,” Mr. Boussamba-Mapa-ga says. “With specific regard tobusiness, one should note the in-troduction of a raft of legislativemeasures that have facilitatedopenings for companies and haveguaranteed their rights.”

The Minister for Trade, Indus-trial Development and RegionalIntegration, Jean Rémy Pendy

Bouyiki, emphasizes Gabon’s ac-ceptance of rules and procedureson issues such as intellectual prop-erty rights. He says the governmentis committed to strengthening pri-vate property, liberalization, andworld trade. “We also have an In-vestment Code,” he adds.

The oil and timber industrieshave long excited foreign invest-

ment interest, much of it Euro-pean. But the Minister says thatother sectors and other playersare becoming involved. For ex-ample, a South African team isworking with the government toexplore mineral potential, in-cluding diamonds and gold.

Gabon is increasingly process-ing some of its raw materials, ratherthan exporting them in crude form,thus offering new investment op-portunities. Similarly, infrastruc-ture development is attracting

foreign participation, notably fromChina and South Korea, accord-ing to Jeanne Ngoleine Ossouka,Director General of FODEX, afund designed to help promote thedevelopment of small and medi-um-sized enterprises.

“The presidential palace and theNational Assembly were built byforeign investors,” she points out.“As for the services sector, infor-mation technology is important.”

Mr. Boussamba-Mapaga alsocites services, including tourism,as a big growth area for thefuture. “We have lots of possi-bilities, with many tourist sitesthat remain to be discovered orcapitalized on in the forests oraround the lakes,” he enthuses.

He believes Gabon has suf-fered somewhat in the past froma lack of business acumen, whichmakes the need for strong for-eign partners all the more essen-tial. The Managing Director of theGabonese Development Bank(BDG), Christian Bongo, agrees,“Gabon’s strength—its wealth—is also its weakness. TheGabonese weren’t very concernedabout investment, as we wereable to finance so much ourselves.In the past, we were not openand we didn’t offer fiscal incen-tives either.”

That situation is changing.“Now we are beginning to be in

■ IMPROVING the nationaltransport infrastructure is a ma-jor priority for the Gabonesegovernment, for both domesticand international reasons. Eco-nomic development requires anexpansion of the highway net-work in particular, and goodtransport links with neighbor-ing countries will enable Gabonto reinforce its role as the sub-

■ A KEY element of the government’s economic developmentaction plan is to give new impetus to structural reforms, includ-ing speeding up the privatization process. This will deliver thetwin benefits of attracting foreign investment and revitalizingstate-controlled enterprises.

The communications sector is a prime target for privatization.After splitting the post and telecommunications agency into GabonPoste and Gabon Telecom, the government is now creating the con-ditions necessary to enable a truly liberalized market to operate.

The government hopes that state-run companies in other sec-tors can also be given a boost through restructuring and foreigninvolvement. Enterprises scheduled for privatization include therailroad Transgabonais, the palm oil business Agrogabon, and thenatural rubber producer Hevegab.

The experience with Hevegab highlights some of the difficul-ties involved. An initial offer in 2000 attracted foreign interest,but no firm bid. Hence the determination of such businesses todownsize their labor force and carry out other reforms to makethemselves more desirable partners for acquisitions.

CHRISTIAN BONGOManaging Director

of BDG

PRIVATIZATION

State-run enterpriseslined up for auction

The 400 mile-long Transgabonais railway is oneof the major transport routes in the country.

Getting on the righttrack for growth

a position to welcome investors,”Mr. Bongo says. “The govern-ment is taking measures that willovercome the problems, as Côted’Ivoire did in the 1990s.” Healso stresses the need for Gabonto develop a true enterprise culture.

Philibert Andzembe, CountryDirector for Gabon for the Bankof Central African States (BEAC),argues that the United States hasa potentially significant role toplay in investing in Gabon.

“U.S. oil imports and Gabon’spurchase of planes from Boeingand Lockheed form a serious ba-sis for relations between the twocountries,” he says. “At the mo-ment, the United States is look-ing at the forestry sector, withinthe framework of the CongoBasin environmental program.

“It is also an important partneroffering technology in the fieldof mineral prospecting. There arenumerous areas for future co-op-eration, including tourism andinfrastructure.”

regional hub of Central Africa."We see transport as the dorsalfin of sub-regional integration," declares the Minister for Trans-port and Civil Aviation, Paulette Missambo. "It enables goodsand people to circulate. And itis all the more important be-cause Gabon imports a lot."An improved road and rail net-work will also help the fightagainst poverty. "Our rural pop-ulation depends on agriculture,"Ms. Missambo points out, "butit has enormous difficulty ingetting its produce to market.Improving the transportationinfrastructure will inevitablyboost farming activity."That responsibility falls large-ly on the Ministry of PublicWorks, Amenities, and Con-struction, which has the job ofdeveloping infrastructure andconstruction projects. Threequarters of the country isforested, so road-building is achallenge. And as the Minis-ter, Egide Boundono- Siman-goye, attests, his departmenthas to keep a fine balance be-tween respecting the naturalhabitat and improving the roadnetwork."Our projects have a direct im-pact on efforts towards regionalintegration," he adds. "Gabonhas a bright future within awell-connected CEMAC zone."

CATEGORIES LIBREVILLE PORT-GENTIL FRANCEVILLE OYEM LAMBARÉNÉ TOTALESTUAIRE-NOUNIÉ OGOOUÉ HT OGOOUÉ WOLEU NTEM MOYEN OGOOUÉNYANGA MARITIME OGOOUÉ LOLO OGOOUÉ IVINDO NGOUNIÉ

AGRICULTURE - - - - - -COMMERCE 921,486 4,200 5000 - - 930,686INDUSTRY 874,850 - - - - 874,850FORESTRY 1,600,000 - - - - 1,600,000REAL ESTATE 2,052,701 24,950 15,400 14,600 13,700 2,121,351CONSUMER DURABLES 7,382,748 942,395 1,688,857 487,082 1,109,579 11,610,661AUTOMOBILE 914,860 75,600 - 19,000 3,000 1,012,460TOTAL 13,746,648 1,047,145 1,709,257 520,682 1,126,279 18,150,008PERCENTAGES 75,73 5,77 9,42 2,87 6,21 100,00

GEOGRAPHIC DISTRIBUTION OF LOANS GRANTED IN 2001 (in thousands of CFA francs)

best facilities, comparable withthose in the West.”

Currently, the 45,000 fixed linesubscribers are located almost ex-clusively in three major popula-tion centers: Libreville, Port-Gentiland Franceville. However, the ad-vent of mobile telephony has addedan important new dimension. Al-ready cellular phone users easilyoutnumber fixed line subscribers.

Three mobile operators are inthe market: Libertis, Celtel andTelecel, the first-mentioned be-ing a wholly-owned subsidiary ofGabon Telecom, which itselfguarantees the interconnectionbetween the three networks.

Libertis currently enjoys theposition of market leader in themobile market, and is determinedto stay there, by building upsteadily but cautiously.

The Minister of Communica-tions, Postal Services, and In-formation Technology, MehdiTeale—whose responsibility al-so covers radio and televisionbroadcasting—is making mod-ernization of the country’s tele-coms infrastructure a key priority.He is delighted that cyber-cafeshave sprung up like mushroomsin Libreville.

The Minister is monitoringclosely what is happening in thecellular phone market. “Compe-tition between different opera-tors ought to benefit the customerand reduce costs,” he argues. “But



■ ONE of the greatest futurechallenges for Gabon will beto reconcile the twin goals ofdiversifying the economy awayfrom dependency on oil, whileprotecting other natural re-sources which offer potentialfor development.

Dense tropical forest coversmost of the country, but thegovernment in Libreville is de-termined to devise sustainablemethods for its exploitation.Recently, a new Forestry Codewas introduced, which theMinister of Forestry, Fisheries,and the Environment, EmileDoumba, says has three mainthrusts.

“First, there is the type ofuse,” he says. “We have enteredan era of sustainable manage-ment, which entails thinking ofthe forest as a body of peren-nial resources. The second as-pect relates to the end product:moving away from simple ex-ploitation of timber to a moredeveloped transformationprocess. And last, we are re-placing family logging opera-tions with community forests,calling on the local populationto act collectively in managingbiodiversity.”

The state sees its role as reg-ulatory, rather than interven-ing directly in forestmanagement. The Minister be-lieves that local companies canwork with foreign partners tocommercialize natural re-sources in sectors such as phar-maceuticals and cosmetics,making an important contribu-tion to the diversification ofGabon’s economy.

Though certain forest prod-ucts—such as okoume, used inmaking plywood—have gainedrenown, there are many othersthat remain largely unknown,he says.

Gabon’s great natural wealthcan also be found in the riversand lakes, as well as in the sea.The country has about 500miles of coastline, but fishinghas not as yet been developedto its true potential, as a sourceof both food for local peopleand produce for export.

■ PRESIDENT Bongo likes todescribe his country’s ports as its“lungs”. It is certainly true that thenational economy relies veryheavily on the export of raw ma-terials and the import of equip-ment, vehicles, and consumer

goods, the vast majority of whichare transported by sea.

There are two main ports:Owendo, about 10 miles outsideLibreville, and Port-Gentil. Owen-do, which is the coastal terminusof the Transgabonais railway, is

renowned for the export of man-ganese and forestry products, aswell as being the port of entry formany of Gabon’s needs. Port-Gentil handles oil, the main ter-minals being the property of theoil company Elf.

In 2002, there was a downturnin overall port activity as a resultof global economic trends, butthe state-owned port authority,OPRAG, is confident that the fu-ture is much brighter. Facilitiesat the ports—some nearly 30years old—are undergoing aprocess of renovation, not just tomeet domestic demands, but al-so to enable Gabon to become agateway to Central Africa.

“Our ambition is to become thehub for the sub-region,” OPRAG’sManaging Director Jean-PierreOyiba confirms. “Gabon has anumber of trump cards in itshands which other countries can’tplay. Unlike Cameroon, for ex-

ample, we have a well-organizedadministration.”

Moreover, the draft at Owendois 11 meters, compared with on-ly seven at Cameroon’s main port,Douala, which means that largerships can be catered to. Port-Gentil is even deeper. Furthermore,with the expansion of containerfacilities, it will be possible tohandle a growth in container traf-fic, including transshipment to

other African destinations.Mr. Oyiba believes that im-

provements to Gabon’s ports willfacilitate privatization in the fu-ture, which is a development hefully supports. He cites Libre-ville’s airport as a model to fol-low: “It functions well these days,because the aircraft servicing andpassenger services are now in theprivate sector.”

He recounts, “We are in theprocess of upgrading our maincommercial quays, at both Owen-do and Port-Gentil. Once that ren-ovation—which is being supportedby the State—has been carried out,we envisage putting some of ouractivities out to tender, to makethem more efficient.”

Mr. Oyiba would like Ameri-cans to recognize Gabon’s strate-gic position in its region. “Givenall the advantages available here,it is important for Western pow-ers to increase their investment.”

■ OIL has been the mainstay ofGabon’s economy since inde-pendence, and foreign companieshave been essential partners in itsextraction. The two most famil-iar names locally are Shell Gabonand Elf Gabon, the local sub-sidiary of TotalFinaElf, whichhave been around in various guis-es for roughly 40 and 50 yearsrespectively. Amerada Hess isanother significant player.

Oil provides around 80 % of thecountry’s export earnings, and two-thirds of the government’s budget.The United States is by far thebiggest customer. Gabon ranksthird among sub-Saharan oil pro-ducers, after Nigeria and Angola,but its size and population are muchsmaller than either of the top two.

In recent years, there has beensome concern at falling productionlevels at various oil fields, in-cluding the largest, Rabi-Kounga.However, many people working inthe business are optimistic that thiscan be compensated for by newdiscoveries, both onshore andoffshore, as well as by the greater

development of natural gas.The Gabonese government is

actively promoting added-valueindustries in the energy sector, aswell as improving the competi-tiveness of the country’s oil in re-lation to that produced in otherparts of Africa. New strategieshave been implemented to stim-ulate further foreign investment.

“We need to encourage in-vestors to come to Gabon to car-ry out exploration, whether onland or below the sea, and thenexploit what we find,” says theMinister for Mines, Energy, Oil,

■ LIKE most former Frenchcolonies, Gabon used to have asingle, state-run postal andtelecommunications agency, theOPT, but this was split in two in2001, as one of the conditions ofan earlier agreement with the IMF.

The result was the creation oftwo separate entities. Gabon Posteremains a government-owned in-stitution and retains a monopolyof mail services, to which it isstarting to add some limited bank-ing activities. Gabon Telecom(GT), on the other hand, is in atransitional stage as a commercialtelecommunications companyslated for privatization, thoughcurrently 100% of its equity isowned by the government.

Several foreign companies haveexpressed interest, though it couldbe a while before anything is fi-nalized. There are many chal-lenges to be overcome, includingthe low level of telecoms pene-tration, though Gabon Telecomis pressing ahead with both en-larging the network and upgrad-ing technology. Gabon is nowlinked to the submarine fiber op-tic cable SAT3.

What is more, the companymakes a profit. “Gabon Telecomfunds itself,” GT’s Managing Di-rector, Hervé Fulgence Ossamyproudly stresses. “My main chal-lenge is to improve the quality ofour services. We have to be ableto provide customers with the

Gabon’s port network is managed by OPRAG, the state-ownedport authority, which is confident a brighter future lies ahead.

Gabon Telecom is pressing ahead with enlarging its network andupgrading its technology while it awaits eventual privatization.

JEAN-PIERRE OYIBAManaging Director

of OPRAG

HERVÉ FULGENCE OSSAMYManaging Director of Gabon Telecom

EMILE DOUMBAMinister of Forestry,

Fisheries, and theEnvironment

Moves tosustainnaturalwealth

Gabon’s timber industry is one of the country’sleading export earners.

Port upgrades advance regional hub hopes

Oil is still the mainstay of the economy

Post and telecoms services are expanding

costs have stayed relatively high,compared with countries such asSenegal or Cameroon.”

Gabon Poste inevitably operateswithin a differentframework, as it hasan important dutyas a public service,which is sometimesin conflict withprofitability. More-over, the government is keen forGabon Poste to expand its opera-tions in rural areas.

That means not just guarantee-ing a reliable and speedy mail de-livery system, but also offering newservices to isolated communities.Zéphirin Rayita, Gabon Poste’s

Chairman and Managing Director,comments, “We have an obliga-tion to be where the state wants usto be. These days, studies show

that more and moremarket women haveopened accounts atour post offices.”

Such a publicmission can con-tribute to social and

economic development, but Mr.Rayita acknowledges that it mightmake any eventual privatizationplans difficult to execute.“If a part-ner came from abroad, we mighthave to change our approach, be-cause his concerns may not be thesame as ours.”

Postal services are to be extended

and new servicesprovided to isolated

communities

and Hydraulic Resources RichardAuguste Onouviet.

“If our department manages tomaintain oil production at around12,500,000 tons a year, we willhave done well,” he says. “Wewill have stopped the decline andwill be able to continue fundingthe economy.”

The Minister believes that theU.S. role in Gabon’s oil industrywill also continue to be crucial.Unrest in the Middle East hasmade African oil production evenmore interesting for Washingtonthan it was before, particularly inthose countries in which Amer-ican companies are involved inboth exploration and extraction.

One such company is the Hous-ton-based independent energybusiness VAALCO, which has a30% interest in the Etame off-shore block through its local sub-sidiary VAALCO Gabon.

Shell is the biggest offshore op-erator, and puts much emphasis onits environmental credentials. “Ourpersonnel pays great attention tonature,” says the Chairman and

Managing Director of ShellGabon, Frank Denelle. “ShellGabon was certified ISO14001 inOctober 2000, and was re-certi-fied in April 2003, thanks to ourconstant efforts to maintain andimprove standards in this domain.”

Minister Onouviet is happy toendorse the big oil companies’en-vironmental record. “They can beshown to be pioneers in the envi-ronmental sector,” he says.“Whether it is Shell or TotalFi-naElf, their concern on this mat-ter is patently obvious. And thiscomplies with the wishes of thegovernment, which has had a rel-evant code of practice in place fora long time.”

Gabon’s only oil refinery is theSOGARA refinery at Port-Gen-til. It is jointly owned by theGabonese government, private in-vestors, and a consortium of in-ternational oil companies led byTotalFinaElf. As well as petrole-um products for export, the refin-ery supplies kerosene, butane, andgasoil to the domestic market.

“I think Gabon’s oil sector stillhas bright days ahead of it,” SOG-ARA’s Managing Director Jean-Fidèle Otando says. “One justneeds to put good prospecting poli-cies into practice, or rather to in-tensify them. And U.S. investorscan contribute a lot to that.”

JEAN-FIDÈLE OTANDOManaging Director

of Sogara

SOGARA refinery is jointlyowned by the state, privateinvestors, and a consortium ofinternational oil firms.

MEHDI TEALEMinister of Communications,

Postal Services, andInformation Technology

ZÉPHIRIN RAYITAChairman and ManagingDirector of Gabon Poste



Moves to boosteconomic linkswith U.S.

TurkeyThe United States

and Turkey arelaying the

foundations for the next stage intheir long-lasting

relationship

TIMBER

Seeking ways to add value to timber■ IN order to meet the globaldemand for woods such asokoume and ozigo, the Gabonesegovernment established a nationallog marketing association calledSociété Nationale des Bois duGabon (SNBG). The companyacts as a type of intermediary be-tween local producers and cus-tomers abroad, while also helpingregulate logging to ensure thatexploitation does not exceed theforest’s regenerative capacity.

“It’s true that our potential isenormous, but we have to man-age it in a responsible way, think-ing of the long-term and of futuregenerations,” says SNBG’s Man-aging Director Jean-ProsperMoussouamy.

The company is concentratingparticularly on finding higher val-ue-added ways of transformingtimber. Okoume, for example, canbe developed for making doors,furniture and parquet flooring.

Such industrialization of the sec-tor will mean that the company it-self has to change, moving awayfrom the simple export of woodto involvement in the in-countrymanufacture of wood products.“We invite American investors tocome and explore this new direc-tion with us,” says Mr. Mous-souamy. “They are most welcome.”

As he points out, “Currently,

we don’t export to the UnitedStates, as it only wants processedproducts, rather than logs. How-ever, Gabonese wood certainlyreaches the USAand Canada viaother countries, which have prob-

ably transformed it and labeledit themselves.”

Local timber sometimes has tocompete internationally with slight-ly cheaper but poorer quality pro-duce from East Asia. Yet SNBG isnot too concerned about this. “Themost important factors for the clientsare the quality of the product, thereliability of supply, and finally theprice,” Mr. Moussouamy says.

Some parts of Asia—China inparticular—have proved to be goodmarkets for Gabonese wood.“Their numerous construction pro-jects, not least in preparation forthe Beijing Olympics and theShanghai Universal Exhibition,have made the Chinese great con-sumers of wood,” he says.

■ TURKEY’s geographical po-sition between Europe and Asiamakes it a country of key strate-gic interest to the United States.The two nations have enjoyed astrong political and military rela-tionship since World War II, withTurkey regarded as an importantNATO ally and an anchor in atroubled region.

More recently, moves have beenmade to strengthen the economiclinks between the two nations.From the U.S. point of view,Turkey represents a bridge to theMiddle East, Caucasus, and Cen-tral Asia, and its movement to-wards EU membership adds to itsappeal as a destination for U.S.investment.

Turkey has been designated aBig Emerging Market (BEM) forAmerican exports and investmentby the Department of Commerce,while the United States is Turkey’sthird largest export market. In 2002,the two countries moved to up-grade bilateral economic relationsby launching an Economic Part-nership Commission. The UnitedStates has also been encouragingTurkey to utilize its geographicalposition to become a major tran-sit center for natural gas from Cen-tral Asia to Europe.

According to former U.S. Am-bassador Robert Pearson, the Unit-ed States has a significant stakein Turkey’s ability to integrate in-to the global economy and movecloser to Europe. “Just looking atthe map makes you see that Turkeyis a hub for a much larger region.It is the country with the largestland area, the youngest population,the oldest democratic experience,

and the best economic potential.” The ambassador describes

Turkey’s economy as “a potentialpowerhouse on the edge of theMiddle East.” He believes thatthe government’s economic re-forms have laid the foundationfor sustained economic growth.

Many highly prestigious U.S.companies have been present inTurkey for years—from GE andFord to Citibank and JP Morgan.Mr. Pearson believes more U.S.investment will follow once theTurkish government takes the

steps needed to encourage it.“There are many sectors here thathave high potential, once we getan investment climate that is sure,reliable, and stable.”

Kemal Unakitan, Turkey’s Min-ister of Finance, says, “We havea very strong strategic relationshipwith the United States and thereis huge potential for trade.”

Mr. Unakitan, who met strate-gic and portfolio investors in NewYork and Boston in July, says thatAmerican investors have beenwaiting for Turkey’s interest ratesto fall before putting their mon-ey into the country. “As interestrates decrease, giant investmentcompanies will bring foreigncapital into Turkey.”

According to the Minister,American interest has been stim-ulated by the recent improvementin the Turkish economy, struc-tural reforms, and the privatiza-tion program. “Those who haveinvestments in Turkey want to in-crease them,” he says.

■ TOURISM in Gabon is in itsinfancy but has a promising fu-ture. The virgin forest is home togorillas and other rare creatures,so the country has much to offerthe traveler wishing to get backto nature. But there are also plen-ty of places where visitors canrelax on a beach, or get a taste ofAfrican life and culture.

“We have 500 miles of coast-line, offering both bathing resortsand opportunities for fishing,” saysJean Massima, Minister of Tourismand the Craft Industry. “But forthe moment, most visitors whocome to Gabon are attracted byour rich flora and fauna, and thebeauty of the landscape.”

Currently, tourism only accountsfor about 3% of Gabon’s GDP,but Mr. Massima expects that fig-ure to more than double by 2010.Eco-tourism is seen as having thegreatest potential. Ten per cent ofthe country was designated as na-tional park land two years ago,and the government wants to sharethese riches with a discriminatinginternational public.Therefore Gabon needs to build

up a tourist-friendly infrastruc-ture, with better transport, moretravel companies, and more ho-tels. Though several mainly city-

based five-star hotels were builtin the 1970s and 1980s cateringto business travelers, there is ashortage of appropriate accom-modations in the hinterland.

“We favor building medium-scale constructions that fit in with

the environment,” the Ministerexplains. “Tourists are far moreinterested in the sites they are vis-iting than in the class of hotel.”

Of course, the level of serviceby hotel and restaurant personnelcan make or break a vacation.“We don’t have institutions ca-pable of delivering the necessarytraining on the spot, so we havesigned agreements with Moroc-co, Kenya, South Africa, andTunisia,” says Mr. Massima.

Gabon now has a Tourism Pro-motion Center, which is helpingboost the sector’s image within thehighly competitive world tourismmarket. A New York-based con-sultancy helps make the countryknown within the United States.

Though Gabon is never likelyto be a mass tourist destination,presently it finds itself at the op-posite extreme. This is partly be-cause direct air links to other partsof the world are very limited, andair fares are very high.

The national airline, Air Gabon,does offer tour companies somespecial rates, including on its flightsfrom Paris. Mr. Massima hopesthat as interest in Gabonese tourismgrows, charter flights might be-come viable and that competitionwill push prices down.

State log marketing company SNBG plays an important role inGabon’s timber sector, which is a vital part of the economy.

Turkish firms display an exceptional capability to adopt thelatest technology and to achieve high levels of productivity.

JEAN-PROSPERMOUSSOUAMY

Managing Directorof SNBG

KEMAL UNAKITANMinister

of Finance

Eco-tourism has big potential

Gabon offers beautifulbeaches, and an interior of

tropical rainforest and rivers.

nor of the Central Bank, says that reducing infla-tion is the number one priority. “Bringing infla-tion down is the common objective of thegovernment and the Central Bank, as it directlyconcerns all sections of society and it is the pre-condition for sustainable growth.”

Turkey has also been making progress towardsachieving its long-held ambition to join the Eu-ropean Union. Both the government and Turkey’sprivate sector have been working to match EU cri-teria for accession talks to begin. Prime MinisterErdogan said recently that Turkey was closer tothe EU target than ever.

Turkey has been offered the prospect of talksstarting at the end of 2004 or early 2005 if it im-plements key reforms, such as bringing its humanrights standards into line. The government saysa package of reforms will be fully implementedin 2004.

Minister of Finance Kemal Unakitan says thetime has come for Turkey to be accepted for mem-bership. “In terms of our mentality and our iden-tity we belong in the EU. Our trade is mostly withthe EU. Many Turks live and run their own busi-nesses in EU countries, and we place a lot of im-portance in the security framework of the EU. Weshould be a member.”

Sustainable growth and EU entryContinued from page 1

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had never been carried out inTurkey, and supervision and reg-ulation were insufficient. It wasimportant to have a separate andimpartial body. BDDK wasformed as a financially and op-erationally independent institu-tion that does not report to anygovernment minister.”

The government aims to con-tinue strengthening the bankingsystem with measures to furtherimprove the efficiency of statebanks, strengthen private banks,and resolve intervened bankspresently under the control of theSaving Deposit Insurance Fund.

Rona Yirçali, Chairman of YapiKredi, one of Turkey’s largestprivately-owned banks, is in nodoubt that the effects of the re-structuring have been beneficialand that the future of both the fi-nancial industry and the econo-my is brighter.

“A healthy financial sector isnecessary to establish an ongoingeconomy. The sector is strongerfor all the changes,” he says.

Yapi Kredi is a leader in retailbanking and other activities suchas wholesale, international and in-vestment banking, and has builtits success on a commitment to



FREE TRADE ZONE

Rapid growth at export processing complex■ CUMULATIVE trade volumeat Turkey’s first privately devel-oped and operated export pro-cessing zone has reached almost$12 billion since its inaugurationin 1990. Located at Gaziemir nearIzmir, the 550-acre site of theAegean Free Zone is home tomultinational companies such asDelphi Automotive and HugoBoss. Prominent sectors rangefrom electronics to food process-ing and machine assembly.

The zone was developed by theAegean Free Zone Developmentand Operating Company (ES-BAS), whose main shareholder isEAC Turkey International, a U.S.company. Kaya Tuncer, ESBAS’sChairman and CEO, says the rapid-ly expanding complex makes anideal location for U.S. firms.“There are tax exemptions, lowerlabor costs, and excellent accessto Europe, the Middle East, Cen-tral Asia, and the United States.”

Firm action and regulation boostconfidence in the banking sector■ REFORM of Turkey’s bankshas been a clear priority since thesevere financial crisis that hit theTurkish economy in 2001. It wasquickly recognized that a weakbanking sector was part of thecause and that a major shakeupwas required.

Change has been focused oncreating an efficient, well-regu-lated banking industry that cancontribute to economic growth byhelping to finance productive in-vestment. Turkey’s oversized andinefficient state-owned banks werepreviously used to prop up thepublic sector and finance politicallyimportant programs. They haveundergone operational and finan-cial restructuring.

Independent regulation and su-pervision has been introduced anddirect action taken to deal with cor-ruption and incompetence amongsome of the private banks. Twen-ty were seized, closed, or sold.

“We have passed many kindsof legislation to bring the regula-tions in line with internationallyaccepted standards,” says the VicePresident of the Banking Regula-tion and Supervision Agency (BD-DK), Ceylâ Pazarbasioglu.“Restructuring of the state banks

was a key pillar of the program.They were a major distortion to thesystem. Before, they were loss-making banks, now they are mak-ing profits, and they are on theirway to privatization.”

The ongoing reform process hashad the backing of the InternationalMonetary Fund and the World

Bank, with which BDDK has col-laborated.“We have been workingvery closely with them, discussingour strategy and providing themwith information about what wehave done and are planning to do,”says Dr. Pazarbasioglu.

She emphasizes the indepen-dence of BDDK as the sector’swatchdog. “The sector was verypoliticized before this institutionwas created. Real banking reform

■ THIS has been a good year forTurkish exports which despite un-favorable world developments—including the Iraq war—havecontinued to rise. According to theTurkish Exporters Assembly(TIM), total export in the first eightmonths of the year was up 29.1%

from 2002.Export figures reachedan unprecedented $30 billion.

Leading the charge have been ex-ports from the textiles and appar-el sector. The latter is Turkey’slargest manufacturing industry andaccounts for 50% of Turkish ex-ports to the United States. Indus-

trial products as a whole, and ex-ports from the agricultural and min-ing sectors, have also shown steadyand substantial increases. Growthsectors include automobiles andautomotive parts, machinery, andelectronics.

Emre Alkin, TIM’s Secretary

General, makes the point that ex-ports rose even during Turkey’s fi-nancial crisis. “We saw a 300%increase, which is incredible.Everybody started to export.”

TIM has more than 31,000 cor-porate members, accounting for$40 billion in global exports. Dr.Alkin believes there is the poten-tial for up to $200 billion. “Our tar-get is $100 billion in exports withinthree years.”

He argues that Turkey is pass-ing through a period of transitionand opportunity. “Both Turkey andthe world are changing, and wehave to read the changes. We feelvery optimistic for the future.”

■ THE Turkish government hasset itself the task of speeding upthe process of auctioning off stateenterprises. The launch of pri-vatizations worth $4 billion thisyear is aimed at raising revenuesof up to $2.1 billion by the endof 2003, in line with Turkey’s$16 billion IMF loan pact.

Several of the companies duefor divestiture have attracted ma-jor investor interest. Three statefirms in particular are expectedto account for the bulk of thecash the administration hopes toreceive: tobacco and alcoholgroup Tekel, oil refiner and petro-chemical producer Tupra, andpetrochemicals company Petkim.

Turkish Airlines (THY), Is-tanbul Stock Exchange (ISE), Is-tanbul GoldExchange, andthe National Lot-tery are all in theprivat izat ionportfolio. Thegovernment al-so intends to transfer the opera-tional rights of major toll roadsand Bosphorus bridges to pri-vate companies.

At the same time, Turkey isseeking to attract direct invest-ment in banks, hotels, tourismfacilities, iron, steel, aluminum,fertilizer, and paper industries,ports and harbors.

“We want to reduce the bur-den on the government and en-courage local as well foreigninvestment,” says Minister of Fi-nance Kemal Unakitan.

As one of the world’s largesteconomies, Turkey offers in-vestors a domestic market of 70million. Amember of NATO andon the way toward membershipin the European Union, Turkeyhas benefited from a customsunion with the EU since 1996.

More than 3 million Turkish cit-izens have settled in EU countriesand there are over 100,000 Turk-ish companies established with-in the EU’s boundaries.

“Turkey is a big country anda young one; almost half thepopulation is under 30,” saysCigdem Tüzün, Director of theForeign Economic RelationsBoard (DEIK). “In the short term,Turkey will be a consumers’heaven for foreign investors, andcould be used as a very good pro-duction base for reaching neigh-boring countries.

“The customs agreement withthe European Union means thatif you are producing in Turkeyyou can export to EU countrieswithout raising any duty. In par-

ticular, there area lot of opportu-nities for invest-ment in theenergy sectorwhere we needgrowth.”

DEIK is a non-profit privatesector organization that seeks toimprove Turkey’s external eco-nomic relations through businesscouncils with investor countries.

Ms. Tüzün believes there is agreat lack of information aboutTurkey in the United States. “Ouraim is to prepare the ground foreconomic cooperation. We or-ganize seminars in various statesto promote Turkey, give infor-mation about developments inthe Turkish economy, and informabout business opportunities inTurkey and the region.”

DEIK is similarly trying to en-courage investment in the other di-rection. Says Ms. Tüzün, “We wantour people to invest in the UnitedStates and for the last two yearswe have been trying to informour members of opportunities.”

EXPORTS

Increased demand abroad for Turkish products

EMRE ALKINSecretary General

of TIM

RONA YIRÇALIChairman of Yapi Kredi

CEYLÂPAZARBASIOGLUVice President

of BDDK

The Aegean Free Zone is just2.4 miles from Izmir Airportand 8.4 miles from Izmir Port.

The recently completed building of the Turkish Exporters Assembly (TIM) responsible for exports worth 40 billion USD

The Istanbul Stock Exchange is in Turkey’s privatization portfolio.

Privatizations drawsubstantial interestfrom investors

Turkey offers adomestic market of

70 million and potentialas a regional

production base

using the latest technology. “Our infrastructure is up to date

and that is why we serve 30% ofthe credit card market,” says Mr.Yirçali. “We were the first bankto move into this market, and thetelecoms market. Due to our in-frastructure most of the foreignbanks prefer to do businessthrough us.

“There are many foreign banksthat are preparing to enter theTurkish market because of its po-tential and its population. Thereis great potential in the credit cardand loans business as the econo-my grows stronger.”

Ersin Özinçe, Deputy Chairmanand CEO of Isbank, says it is es-sential for Turkey to adopt Euro-pean rules in the banking sector.

“We are on the right track. Thereare serious opportunities forgrowth in many sectors, includ-ing banking, insurance, and bro-kerage. The areas where we seethe highest potential are mobileand internet banking.”

1990 2000 2010 2020 2025

0-4 6.610 6.586 6.640 6.668 6.651

5-14 13.328 13.149 13.175 13.278 13.304

15-64 34.022 43.440 51.808 57.994 60.140

65+ 2.243 3.659 4.655 6.494 7.919

TOTAL 56.203 66.834 76.278 84.434 88.014

POPULATION OF SELECTED AGE GROUPS( 1000 PERSONS )

Source: TUSIAD

ERSIN ÖZINÇEDeputy Chairman and

CEO of Isbank

¸

¸

¸

¸

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■ THE 300,000 square miles ofTurkey harbor a vast and diversemineral resource base, givingthe country great potential formining. Exploiting it will requireinvestment and exploration, andforeign companies are being en-couraged to bring in capital, ex-perience, and state-of-the-arttechnology.

Commodities requiring largescale mining include bauxite,chromites, copper and copper-zinc, gold, iron ore, and silver.There are also significant re-sources of barite, boron, lime-stone and marble, magnesite,pumice, strontium, and soda ash.The lure of gold has proven par-ticularly attractive and severalforeign firms have been evaluat-ing potential deposits.

Denver-based Newmont Min-ing Corporation took over Turkey’sfirst modern gold mine at Ovacikwhen it acquired the Australiancompany Normandy Mining in2002, becoming the world’s largestgold producer in the process.

“We have ambitious plans forTurkey, which is why we arehere,” says Sabri Karahan, Gen-eral Manager of Newmont Nor-mandy Madencilik. “We startedexploration this year and we arevery hopeful for the future,knowing that Turkey has the po-tential.”

Located near the west coast inthe Aegean region, 75 miles northof the city of Izmir, the Ovacikdeposit consists of two high-grade epithermal quartz veins,which are mined by both open pitand underground methods. In itsfirst year of operation ending inJune 2002, 113,187 ounces ofgold and 144,746 ounces of sil-ver were produced; export earn-ings totaled nearly $33 million.

Newmont’s policy is to em-ploy the best technology andmanagement practices available.“You will not see anything bet-ter in the United States than you

see here,” says Mr. Karahan.Equally optimistic and com-

mitted to best practice is theCanadian-Turkishjoint venture ÇayeliBakir Isletmeleri(CBI), which oper-ates the Çayeli cop-per–zinc mine onthe Black Sea Coastin north-easternTurkey. Inmet Min-ing of Toronto owns55% of the compa-ny and the other45% is held bythe Turkish state-owned companyETI Holding.

The copper andzinc concentratesproduced at themine are shipped tocustomers world-wide. The mine hasbeen in productionsince 1994 and stillhas a long future,according to CBI’sGeneral Manager,John Timmons.

“There are proven reserves foranother 13 years at the currentproduction rate.”

The company islooking for opportu-nities to grow and isstarting new explo-ration activities closeto the mine site.“There are excellentpossibilities for ad-ditional deposits inthis region,” saysMr. Timmons.

In July, Inmet an-nounced that CBIhad entered into anagreement with asubsidiary of TeckCominco Limited topurchase the RizeProperty, whichcomprises two min-eral licenses adja-cent to the currentCBI holdings. CBIintends to systemat-ically explore thestrike extent of theÇayeli horizon onthe Rize Property.



APPAREL

Selling Turkish jeans to Americans Winning the support ofthe local community■ WHEN Chelsea Clinton and

Cher were seen wearing its prod-ucts, it was the clearest possible sig-nal that Mavi Jeans had well andtruly arrived in the United States.

In March, the company openeda 500 square meter flagship storein New York City’s Union Square,marking the latest stage in whathas proved a remarkably suc-cessful campaign to become aleading player in the U.S. jeansmarket.

“Since 1996 we have been sell-ing two million jean products ayear in North America,” saysMavi’s Chairman andfounder Sait Akarlilar. “Wehave built up a strong dis-tribution network in theUnited States, and I believewe will become a marketleader there.”

Mavi’s U.S. breakthroughcame in 1998 with the hugesuccess of its Molly brandfor women. Subsequently,both Nordstrom and Bloom-ingdales began selling the

jeans. Since then, the companyhas launched other lines and hasbecome one of America’s topbrands for the under-25s. NorthAmerican sales were $45 millionlast year, while worldwide sales to-taled $250 million.

Marketing is one of the compa-ny’s strengths and has alreadyhelped to make Mavi the mostpopular jeans brand in Turkey. In2001, Mavi became the first Turk-ish brand to launch an advertisingcampaign in the United States andCanada, followed by a second cam-paign last year with the slogan

“Mavifits.” The companyopened its first internation-al flagship store in Van-couver last December.

Ersin Akarlilar, Presidentof Mavi America, says,“North America is the mostimportant market to con-quer. It accounts for 50%of the jeans consumingmarket. Not to be success-ful in the United States issimply not an option.”

■ MINING companies have had to become far more awareof the need to protect the local environment and win the sup-port of the local community. Both Newmont and CBI employpeople living in the areas surrounding their mines and con-tribute actively to local services, including education andhealth. “The people in the community and our employees arevery supportive of our operation,” says CBI’s General Man-ager, John Timmons.

Newmont’s General Manager Sabri Karahan describes hiscompany’s relationship with the local community as “inter-active.” He says,“We talk with them to understand their con-cerns and regard them as our partners.” Newmont is currentlyworking on what it calls the Zeus Rose Project, a scheme toturn neighboring Bergama into a center of gold jewelry pro-duction. Mr. Karahan says, “We want to see the gold producedin the area, handled by local people, and turned into jewelry.”

■ TURKEYhas been taking stepsto strengthen its role as an energybridge between the major oil pro-ducing areas of the Caspian Seaand the Middle East, and theirEuropean markets. However, thecountry has limitedenergy resources ofits own with which tomeet rapidly in-creasing domesticdemand, and is high-ly dependent on im-ported oil and gas.

In addition to tak-ing steps to diversi-fy Turkey’s sourcesof supply, Ankarahas been working toestablish a properlyfunctioning internal energy mar-ket for the country’s gas and elec-tricity sectors.

The demand for gas has in-creased rapidly in Turkey overthe last decade and Ankara en-visages increased use in powergeneration and for heating pur-poses. Currently all the naturalgas that Turkey needs is import-ed by the state-owned natural gascompany, Botas, which is head-ing for privatization. The phaseddivestment of Botas’s existinglong term import contracts wasdue to begin this month.

“The first gas release contractsshould be signed by November2003,” says Yusuf Günay, Presidentof the Energy Market RegulatoryAuthority (EMRA). “After thatdate, the private sector may sell andimport natural gas in Turkey with-in the price ranges determined bythe regulations.”

Mr. Günay describes the re-structuring process as “crucial”and says it should end with thegovernment’s withdrawal from theenergy sector.

Turkey is also on the path towarda free market in power generationand distribution. The state-ownedTurkish Electricity Generation andTransmission Corporation (TEAS)has been unbundled and the

generation andtrade companiesare expected to beprivatized. Howevertransmission of elec-tricity will continueto be run by the state.

Total installed gen-erating capacity inTurkey is 26,000MWand there are plansfor an additional23,000 MWby 2020.Approximately 45%

of capacity is accounted for by hy-droelectricity, which has seen rapidexpansion.

Turkey has more than 100 pow-er plants and 21 dams, and 19 newhydropower plants are being con-structed as part of the $32 billionSouth-eastern Anatolian GAPpro-ject. In March 2002, a $900 mil-

lion dam in southern Turkey wasopened. There are long term plansto develop nuclear energy as asource of electricity.

“With the increase in livingstandards in Turkey, consumptionwill increase and this will cre-ate extra energy needs. We haveto prepare for the future,” saysErdogan Demirören, Presidentof the Demirören Group, whoseinterests range from the energysector to manufacturing.

Demirören operates a trans-portation fleet of 155 tankers andthree sea vessels around the clockto ensure reliable supplies of liq-uefied petroleum gas. “Our task isto ensure that economic activity isnever interrupted because of lackof energy,” says Mr. Demirören.

The group’s main objective is togrow in the LPG and oil business.“Ours is the biggest investment inLPG, and we have investments inpipelines. If any investors in theenergy sector are looking for a part-nership, we are ready to discussprojects related to our operation.”

YUSUF GÜNAYPresident of

EMRA

SAIT AKARLILARChairman of Mavi Jeans

ERSIN AKARLILARPresident of

Mavi America

SABRI KARAHANGeneral Manager

of NewmontNormandyMadencilik

JOHN TIMMONSGeneral Manager

of CBI

The Çayeli copper-zinc mine, operated by the Canadian-Turkishjoint venture CBI, has proven reserves for another 13 years.

Newmont has high hopes forits gold mine at Ovacik.

Reliable supplies of liquefied petroleum gas are provided by Demirören.

The opening of Mavi Jeans’international flagship store, inNew York, reflects the company’ssuccess in the United States.

Restructuring the energymarket to meet demand

Foreign input needed toexploit hidden wealth

ENVIRONMENT



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Rolf HoldingPresident: Sergey PetrovAltufyevskoe Shosse, 31, bld. 7Moscow, RussiaTel: (095) 785 1976 Fax: (095) 785 1952 Email: [email protected]

A Smooth Ride to Success

■ RELATIONS between theUnited States and Russia havewarmed and strengthened con-siderably in recent years, withimportant initiatives emergingfrom meetings between Presi-dents Bush and Putin. The rela-tionship has been bolstered bya united front against terrorismsince the attacks of 9/11. Aftertheir most recent talks at CampDavid in September, the twopresidents declared themselves“allies in the war on terror.”

Despite their differences overthe Iraq conflict, both leaderswant to help build democracy inthe country, and both agree thatthere is “no reasonable alterna-tive” to the road map for peacein the Middle East.

Initiatives on the economicfront include the Russian-American Business Dialogueestablished in 2001,a business-to-business mecha-nism intended toincrease contact be-tween the privatesectors of the twonations. The dia-logue aims to iden-tify barriers to tradeand investment, andprovide a forumwhere business in-terests can be raisedwith the respectivegovernments.

According to the U.S. StateDepartment, elevating the in-volvement of the business com-munity in bilateral discussionsshould promote economic re-form, a transparent and pre-

dictable business climate andrule of law, and work towardsRussia’s early accession to theWorld Trade Organization.

Andrew Somers, President ofthe American Chamber of Com-merce in Russia (AmCham), be-lieves that connections betweenthe two countries will becomeeven closer. “The U.S. govern-ment and President Putin havemade very clear statements andtaken very concrete actions thatrecognize the mutual self-inter-est of a strong, strategic rela-

tionship, politically,economically, andcommercially.”

Valery Goregliad,First Deputy Chair-man of the Councilof Federation, de-scribes relations as“positively and dy-namically devel-oped.” He says,“We have learnedto talk the same lan-guage, at least inpolitics.Now wehave entered a new

stage where we need concreteagreements, first of all in the eco-nomic sphere. Establishing our-selves in the U.S. market is oneof the strategic goals of Russia’sforeign policy.”

■ RUSSIAN oil companies havebeen actively seeking to developcloser ties with the United Statessince Presidents Bush and Putinlaunched a new energy dialogueaimed at strengthening the over-all relationship between the twocountries in May 2002. Analystsestimate that Russia could handleup to 15% of the U.S. oil importmarket.

Andrew Somers, President ofAmCham, the American Cham-ber of Commerce in Russia, sees“enormous potential for fruitfulcooperation between the twocountries” in the creation of thegovernment-to-government U.S.-Russia Energy Dialogue, whichhad its second summit in St.Petersburg in September.

Of equal significance is the pri-vate sector Russian-AmericanCommercial Energy Dialogue, com-prised of five working groups ofU.S. and Russian energy companyexecutives, which makes recom-mendations to both governments tofacilitate commerce in the sector.

Elena Korzun, General Directorof AssoNeft, which represents theinterests of small oil and gas pro-ducers in Russia, says, “We believethe prospects for cooperation withthe United States are very bright.We are hoping for an exchange oftechnologies, for example.”

Ms. Korzun highlights the trans-portation problems facing Russianoil companies. However, she be-lieves these will be solved by pro-

jects being undertaken by the oiltransportation company, Transneft,which is currently building sever-al pipelines at a total cost of over$1 billion. There are also plans fora private Western Siberia-Mur-mansk pipeline.

A company with one of thelongest transportation routes isGeoilbent, which operates in WestSiberia. Originally a Russian-American joint venture, Geoilbentbecame 100% Russian owned in

September when Yukos, one ofRussia’s largest oil companies,signed an agreement with HarvestNatural Resources to acquire the34% American interest through aYukos subsidiary.

Geoilbent’s Director General,Eugeny Grebenschikov, says that,like all Russian oil companies,his firm is looking for opportu-nities to increase foreign sales.“We view positively any initiativeto increase exports.”

■ WITH average income rising,Russians are making up for yearsof austerity and becoming dedi-cated consumers. Analysts are fore-casting that disposable income inRussia will increase by 46% by2010, and predicting that person-al spending willbecome a majordriving force ofthe country’seconomy.

With sales ofmobile phones,h o u s e h o l dgoods, cars, andclothes boom-ing, retail salesare expected toalmost doublefrom $110 bil-lion in 2002 to $204 billion by 2008.

Russians are also becomingmore discerning consumers, andthe demand for quality benefitsboth leading domestic producersand foreign brands.

More than 200 years of produc-tion have given textile and cloth-

Partnership withU.S. strengthens

RussiaMutual self-interestin a changing worldis prompting closercooperation andfriendship betweenthe two nations

Trade. “Now it is at least 5.5%,and that is still conservative. Morerealistic is 5.8-5.9%.”

The process of economic reformhas been speeded up. “We need toact quickly,” says Mr. Dvorkovich.“This includes administrative re-form and restructuring of institu-tions, especially education andscience as the basis for innovation

and growth. It also involves the re-form of monopolies—gas and elec-tricity sector reform.”

Valery Goregliad, First DeputyChairman of the Council of Fed-eration, says that Russia needshelp to develop sectors with highpotential, such as the aerospace in-dustry and IT, to increase the vol-ume of its oil refining industryand develop its infrastructure. “We

need to modernize our enterpris-es to guarantee long-term growth.”

According to Charles Ryan,Chairman of United FinancialGroup (UFG), state and legal in-stitutions need to be stronger. “Ifthe structural reform process ad-dresses areas such as the bankingsystem and the legal system, it willput in place conditions that willlead to the investment needed.”

Reforms, growth and opportunitiesContinued from page 1

Russia is well on the way to becoming a consumer society.

ELENA KORZUNGeneral Director of

AssoNeft

Bright hopes for energy cooperation

ing manufacturer TrekhgornayaManufactura a well-establishedreputation and strong brand recog-nition. Clothing made of light cot-ton produced by Trekhgornaya,characterized by bright colors,varying patterns, and national

features, can be found in everyhome in Russia.

“Our products are always in de-mand and we are organized in sucha flexible way that we are able todiversify very quickly in accor-dance with changes in the market,”says Dimitri Danilin, the compa-ny’s General Director.

The factory produces more than800 articles of clothing. Everyyear over a hundred new patternsfor different fabrics are introduced.“We have monopolized the pro-duction of cotton fabrics withwoven patterns,” says LolitaDanilina, Chairman of the com-pany’s Supervisory Board. “Ouryarn is so fine that it matches thequality of Italian manufacturers.”

TrekhgornayaManufactura stilloccupies the location on the bankof the Moskva River near Kras-naya Presnya, where it has beenproducing cotton fabrics andhousehold textiles since 1799.Within recent years the factory’stechnological equipment hasbeen thoroughly renovated andall labor-consuming processeshave been automated.

Three company shops havebeen opened and Trekhgornayaproducts are also on sale in 150Moscow department stores.Turnover in 2002 was approxi-mately $20 million.

While the quality of Russian-

Geoilbent Joint Venture currently produces more than 13,000 barrels of oil per day from the significant oil and gas fields in the Purovskiy District of Russia. Further exploration and development is planned on the Neocomian and Cenomanian horizons.

made cars has improved consid-erably, demand for high qualityforeign-made vehicles continuesto increase.

Rolf, the largest car distributorin Russia, achieves annual salesof over $200 million. Founded as

a small carrental companyin 1991, Rolfwas appointedby Mitsubishii n 1992 a si t s dealer inMoscow. In1998, the com-pany becameMitsubishi’sgeneral distrib-utor in theEuropean partof Russia.

“Mitsubishi is our priority andwill be our main business for thefuture as a national sales compa-ny,” says Sergey Petrov, Rolf’sPresident. In 2002, Rolf wasranked among the 10 largestMitsubishi distributors in Europe.

■ LUXURY chocolates made by the Moscow-based chocolatierA. Korkunov have been available in the United States sinceJanuary, when the company opened an office and distributioncenter in New Jersey. “We already have distribution in morethan 20 states,” says Chairman and founder Andrei Korkunov.“The response has been very encouraging.”

The company has built its reputation in Russia on the qualityof its products, which are manufactured from the best cocoa beansand nuts from Piedmont in Italy. Demand is so high that a newproduction facility is being built.“We have more orders than our

factory can fill,” explains Mr. Korkunov.“We work 24/7, and we sell everythingthe same day it is produced.”

The expanded facility will allowproduction volume to be substantiallyincreased and with that will come ex-panded export operations. The compa-ny already exports to Germany and willcommence deliveries to Japan in 2004.

“Our new capacity will also help usmanufacture new varieties, including amass market product,” says Mr. Ko-rkunov, who emphasizes that the focuswill remain on quality.

CHOCOLATE

Tasting sweet success inthe American market

ANDREI KORKUNOVChairman of the

Board of Directorsof A. Korkunov

SERGEY PETROVPresident of

Rolf

LOLITA DANILINAChairman of the

Supervisory Boardof Trekhgornaya

Manufactura

DIMITRI DANILINGeneral Director of

TrekhgornayaManufactura

ANDREW SOMERSPresident of the

American Chamberof Commerce

in Russia

The company’s distribution net-work covers over 30 of Russia’slargest cities. From its centralspares warehouse and distribu-tion center, the latest technologyand transport methods are used tosupply Mitsubishi spare parts toall of European Russia, Siberiaand the Far East.

Initially a single-brand dealer,Rolf has diversified and todayworks with several car producers.Its retail activities include the saleand service of cars from Mitsubishi,Audi, Hyundai, Volvo, and Ford.

Through its extensive networkof owned and affiliated dealers,Rolf offers its customers servicesranging from used vehicle sales,credit and leasing sales, access topreferential insurance rates, re-pairs, and vehicle transportation.

“We want to develop our retailbusiness, so we decided to expandour network,” says Mr. Petrov.“We are going to build a new sys-tem of delivery, spare parts, sup-ply, and training, and introducenew standards of service.”

Quality counts as Russian spending rises

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