March 1990, Page 55

Trade and Finance

By John T. Haldane

US Pavilion at Baghdad Fair A Hit

Dr. Russell Smith, commercial attache at the US Embassy in Baghdad, reports that the American pavilion at the November Baghdad International Fair was awarded a gold medal in recognition of its large display area and high number of participating firms. Most of the 55 American firms have decided to take booth space again next year, he said.

Interest in the American products and technical services exceeded that of any previous fair. Three Iraqi cabinet ministers and a large number of other Iraqi senior officials and business executives who visited the pavilion praised the displays on equipment and state-of-the-art technical services.

The Baghdad International Fair traditionally is Iraq's premier annual trade event. Sixty-two countries, with over 2,000 companies represented, participated in this year's fair.

Turkey's Greater Anatolia Project

On Jan. 13, the Turkish government began holding back the flow of the Euphrates for one month in order to begin filling the reservoir behind the newly constructed Ataturk dam. The Ataturk reservoir, when full, will hold four times the annual flow of the Euphrates. It is the key structure in Turkey's $21 billion Great Anatolia Project (GAP), which will come to include 21 large dams, 19 irrigation projects and 18 hydroelectric plants on the Euphrates and Tigris rivers by the year 2005.

The Euphrates long has been a critical factor in Turkey's economic well-being. The river is the source of 45 percent of Turkey's electrical production, as well as water for domestic and industrial consumption, and agricultural irrigation. The GAP project is designed to harness the waters of the Euphrates and Tigris rivers to provide no less than 75 percent of the country's electricity and virtually double the extent of the country's irrigated land. In all, the scheme will permit Ankara eventually to develop two million hectares of irrigated and partially irrigated land in the southeast Anatolian region, of which 1.5 million hectares will be watered by the Euphrates. The Ataturk dam, besides allowing 700,000 hectares on the Urfa Plain to be irrigated, will enable 2,400MW of electricity to be generated.

Turkish Prime Minister Turgut Ozal has said repeatedly that he hopes the project will turn southeast Turkey into a vast market garden capable of supplying the needs of the Arab countries to the south. He predicts that food production will be increased 10-fold, once the dam projects are completed.

Tunisia Liberalizes Its Economy

The Tunisian government continues to push an economic liberalization program designed to increase the role of economic incentives and reduce the number of direct government controls. Import regulations have been relaxed considerably as economic expansion, fueled by rising exports of manufactured goods, requires higher levels of imports to feed industry. The import of raw materials and semi-finished products has been liberalized. Subsequently, the importation of goods rose 26 percent to $3.8 billion last year, compared to a 9 percent increase in 1988. Enterprises which export more than 15 percent of their production now may freely import all the materials and equipment they require.

The success of Tunisia's export drive is reflected in improved showings by most of the manufacturing industries. Those producing for the domestic market grew by 4 percent, while export-oriented sectors expanded 12 percent. Customs tariffs on imports of capital goods have been cut considerably, with the maximum customs tariff in effect reduced to 43 percent from 220 percent. Tunisian officials plan to reduce the maximum rate further to 25 percent by 1991. Tunisia is in the final phase of negotiations for full membership in the GATT.

The Tunisian economy now is moving toward a modern, open system with a more prominent role assigned to the private sector and less interference by government agencies. The slow but steady privatization of many state firms is continuing, as the government looks increasingly to the private sector to make the kind of productive investment necessary to cope with one of the country's major economic problems—chronic unemployment.

Major goals for 1990 are consolidation of the improvement in the balance of payments and higher levels of investment. Increased exports of food products, textiles and mechanical and electrical equipment all will play their part, but the most significant contribution should again come from the tourism sector. Tourism was up 50 percent last year, primarily due to the more than one million Libyans who visited Tunisia. The Libyans spent over $600 million, pushing income from tourism in 1989 to nearly $1.5 billion.

John T. Haldane is a Middle East specialist who has served as a foreign service officer in Baghdad, Cairo, and Beirut, and as an international economist in the department of Commerce and Treasury.