Turkey May Withdraw 15 bln USD Bond Reserves from France for Armenian "Genocide" Bill
    2011-12-28 01:17:50     Xinhua       Web Editor: Cui Chaoqun

Turkey's Central Bank might transfer its 28.8 billion Turkish Liras (15.3 billion U.S. dollars) of investments in French bonds to other European countries as part of sanctions against France for the Armenian "genocide" bill, local media quoted economists as saying on Tuesday.

"Judging from the recent steps taken by the Turkish government and the political tone, I can expect the Turkish Central Bank could withdraw its reserves from France as part of its economic sanctions in the future," Turkish newspaper Hurriyet Daily News quoted Erol Katircioglu, professor of the economics department of Istanbul Bilgi University, as saying.

Further, Kerem Alkin of Istanbul Commerce University said it is the right of Turkey to withdraw its reserves from France and the move will prove Turkey is playing sanctions for real, according to the Hurriyet report.

With a government bond of 28.8 billion Turkish Liras (15.3 billion dollars), Turkey's Central Bank reserves in France are second only to the United States' 48.6 billion Turkish Liras (25.7 billion dollars), according to the report.

By the end of 2010, Turkish Central Bank's total investments in various banks registered 110.1 billion liras (58.4 billion dollars) . In European countries, the bank had 17.7 billion liras (9.4 billion dollars) reserves in Germany, 4.8 billion Liras (2.5 billion dollars) in Belgium, 4.5 billion liras (2.4 billion dollars) in the Netherlands and 1.3 billion Liras (689 million dollars) in the United Kingdom.

In 2010, Turkey invested around 17.7 billion liras (9.4 billion dollars) to purchase the French government bonds amid the euro zone crisis. "The French economy might face serious difficulties if the Turkish Central Bank withdraws reserves," said Mehmet Usta, deputy chairman at Bank Aktif, who also served as general manager at Banque de Bosphore in France between 1994 and 2007.

France's need for liquidity is rising due to the ongoing European debt crisis. Turkey's investment in the country would still play an important role if France could not compensate the amount from any other source immediately, said Mehmet Usta.

"German bonds would be the primary choice of Turkey's Central Bank instead of French bonds," Mehmet Usta said.

However, such a move might bring negative effect to Turkey's EU membership bid, said Erol Katircioglu.

On Thursday, Turkey halts "all political consultations, joint military activities and maneuvers" in response to the French approval of a bill, which stipulates criminal sentences and fines for those who refuse to recognize the killing of Armenians in 1915 as "genocide" in France.

Turkey and Armenia have been bogged down in a dispute over the World War I-era deaths of Armenians under the Ottoman rule. Armenia says the deaths occurred in a "genocide," while Turkey denies the charge and insists that the Armenians were victims of widespread chaos and governmental breakdown as the Ottoman Empire collapsed before modern Turkey was created.

Turkey rejects the term "genocide" for killings of Armenians in the World War I era, arguing the issue should be left to historians. Ankara has proposed to establish a joint commission by Turkish, Armenian and other international historians to discuss incidents in 1915. Armenia has not responded positively to the offer.

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