With West Germany and the United States leading the way, the major Western nations yesterday pledged a total of $1.16 billion in emergency aid to rescue Turkey from threatened economic and political collapse.
Turkey has been plagued by 20 percent unemployment, 80 percent inflation, lack of hard currency to pay for oil imports and a wave of political violence that prompted Prime Minister Suleyman Demirel two months ago to appeal for aid.
"If we fail to obtain Western support, we may become another Afghanistan," he said at the time.
The scope of the Western aid package now being put together reflects a major effort to strengthen the strategic country on NATO's southern flank in the wake of regional turmoil generated by the upheaval in Iran and the Soviet invasion of Afghanistan.
Yesterday's joint action demonstrated firm allied support for Demirel's stabilization program and brought the aid figure close to the level experts believe necessary to set Turkey on a recovery course.
Turkey has already received $220 million from the International Monetary Fund, and the World Bank is reported close to approving a substantial loan to the Demirel government. Moreover, Turkey and the IMF are currently discussing a new standby loan agreement for the fiscal year beginning in July.
U.S. officials here said that the governmental aid package is expected to encourage private bank loans to Turkey. They also indicated that the United States and other Western allies would try to reschedule Turkish debts in a move that would bring the total Western aid to well cover $2 billion.
Demirel said in February that Turkey needed about $2 billion in emergency aid this year to revive Turkey's "dying economy" and prevent social and economic unrest "from which only Communists would benefit."
Yesterday's pledges were announced in Paris after a special meeting of the Organization for Economic Cooperation and Development (OECD). Most of the funds would be extended in form of loans, but part involves outright grants.
The United States and West Germany made the largest pledges, $295 million each. Italy pledged $115 million; France, Japan and the European Community $100 million each; other contributors include Britain, Switzerland, Canada and the Netherlands.
The West German government was the principal coordinator of the aid effort. Western diplomats said yesterday that there were indications that the initial portions of aid delivered and political support for Demirel's economic reforms have halted the downward slide of Turkey's economy.
But it is still unclear whether Demirel would be able to turn the economy around. In an effort to revive it, Demirel has proposed several measures, including attracting foreign investments, denationalizing mines, encouraging exports and cutting the benefits enjoyed by state-owned firms with monopolies on both imports and sales.
The reforms were accompanied by stringent austerity measures that included devaluation of the Turkish lira by more than 40 percent and price increases on almost all basic commodities ranging from 50 to 300 percent.
The principal reason for Turkey's sharply deteriorating situation during the past two years was the sharp increase in the price of oil. By this January, Turkey had exhausted its foreign exchange reserves and had contracted a huge foreign debt exceeding $14 billion. Unable to pay for oil and without credit, Turkey virtually ran out of heating fuel and was unable to purchase oil and materials for its industry.
Turkey's economic difficulties were accompanied by growing political violence involving rightist and leftist urban terrorist groups causing an average of five deaths daily. From eastern Turkey where about 7 million Kurds live, there have been reports of armed clashes, between the Turkish Army and Kurdish secessionists.
Turgut Ozal, Turkey's top economic official, was quoted yesterday as saying that his country's economy was showing marked signs of improvement over the past two months. Apart from teh IMF loan, the improvement was made possible by a quick infusion of about $400 million in European Investment Bank funds.
Demirel has mounted a major crackdown on urban terrorism and several thousand suspected terrorists have been arrested in the past two months.
But analysts here believe that crucial to Turkey's recovery will be the implementation of Demirel's economic reforms to revitalize the economy.