Turkey Signals Hope to US

ISTANBUL (Reuters)-Turkey signaled on Friday it was within reach of an urgently awaited deal with the United States allowing US forces to deploy on Turkish soil for a possible attack on neighboring Iraq.

Prime Minister Abdullah Gul–speaking as US naval ships waited not far from Turkish ports and troops readied for airlift–said there were still differences on a key financial compensation package and other issues.

The United States–possibly only a few weeks away from war–had expected Turkey’s parliament to approve deployment of tens of thousands of troops on Tuesday. A decision has been delayed while Ankara seeks improvement on an approximately $26 billion package to cushion the country against the impact of war.

Washington–which with much further delay might have to abandon an assault from Turkish territory and divert forces south to join a main invasion force near the Gulf–said on Thursday its offer was final.

In Washington–a Bush administration official said the talks had taken a "very positive" turn but a final agreement had yet to be reached. "It’s progress. It’s very positive," the official said. "We’ve been working through tough issues."

The official said the size of the economic aid package was unchanged. It would still cost US taxpayers $6 billion and provide Turkey with gran’s–credits and US government backing for up to $20 billion in loans.

While holding firm to the $6 billion figure–officials say the United States may alter the structure of gran’s and loans to give Ankara more flexibility in using the money and how much it can raise through private banks with US backing.

The United States may reduce the amount set aside to support the loan guarantees–thereby increasing how much Turkey can borrow without increasing the cost to US taxpayers.

Time presses hard. If agreement is reached over the weekend–a vote might not take place until Tuesday. A Memorandum of Understanding must then be hammered out and signed-something that could take several days.

Troops and equipment would then be brought in through southern–Mediterranean ports and airbases currently being upgraded by US and Turkish engineers under an interim deal.

Around 250 US troops bound for Turkey arrived at a Romanian air base near the Black Sea port of Constanta late on Thursday. Others might arrive quickly from Germany. Should Turkey fail to agree to the passage of US troops across its territory–it would forfeit the financial package. Financial markets–which have assumed a deal will be sealed–would fall steeply in anticipation of economic storms ahead.

Turkey would be left alone to weather the high oil prices–rising interest rates on its debt and heavy blows to its tourism industry and other trade. A $16 billion IMF crisis programme would be in serious doubt. For Turkey–then–a stark choice.

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