Bush May Offer Turkey Military Economic Aid

WASHINGTON–DC (Reuters)–The Bush administration is preparing a major military and economic aid package for Turkey–a critical ally in any US attack on Iraq–people involved in the deliberations said on Tuesday.

While it has yet to be finalized and could still be scrapped–congressional sources said the package may top $800 million–divided between military and economic aid–which could come in the form of debt relief.

Ankara could also benefit under a proposal backed by key lawmakers to help General Motors Corp. (GM.N) obtain US Export-Import Bank financing for a $4.25 billion contract to supply the Turkish military with 40,000 trucks.

Legislation–supported by lawmakers from GM’s home state of Michigan including Senate Armed Services Committee Chairman Carl Levin–would be needed because existing Export-Import Bank rules prevent it from financing military sales.

Sources said it was unclear how elections in Turkey–and the United States–would affect the aid packages.

Faced with a seismic shift in Turkey’s politics–the Bush administration has moved to improve ties with its key ally’s victorious new Islam-rooted ruling party–encouraged it will continue a Western-oriented foreign policy that includes cooperation on Iraq.

Turkey’s new army chief of staff–representing a key constituency in Turkish politics–meets senior US leaders in Washington this week.

KEY ALLY

The United States is counting on Turkey’s help if it takes military action to topple Iraqi President Saddam Hussein–whom Washington accuses of seeking weapons of mass destruction.

Turkey already allows US and British warplanes to use one of its air bases to patrol a no-fly zone over northern Iraq.

But the NATO member fears war on its borders could further damage the crisis-hit economy and fuel unrest among its own restive Kurdish population in the southeast–particularly if the Iraqi Kurds seek an independent state over the border.

Bush could propose the aid package in the coming weeks as part of a supplemental funding request or in his next budget. The White House Office of Management and Budget declined to comment.

In addition to military and economic aid–the White House is pressing Congress to grant many Turkish goods duty-free access to the US market.

Vice President Dick Cheney has played a central role in the effort–personally pressing lawmakers to provide Turkey with trade benefits under the so-called Qualified Industrial Zone program–which Congress established in 1996 to bolster economic ties between Israel–Egypt and Jordan.

Turkey has been pressing Washington to provide more than $4 billion in debt relief–but US lawmakers have so far balked at the price tag–according to congressional sources.

The outlook for the General Motors deal is also uncertain.

The company’s supporters on Capitol Hill say the contract involves non-combat vehicles that could be used by Turkey in its peace-keeping mission in Afghanistan–and warned that a competing European automaker could clinch the deal if Congress and the Export-Import Bank fail to act.

A GM spokesman would not comment on its bid for the military waiver. An Export-Import Bank spokesman confirmed that the lending agency was holding discussions with GM–but has told the firm: "That transaction–as it stands–is not one that we’re allowed to do."

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