The Turkish State has made great strides in the struggle against terrorism which it has carried out with great determination. The strength of the terrorist organization has been destroyed and the terrorist leader has been captured.

There is no doubt that economic and social progress in Eastern and Southeastern Anatolian provinces is of great importance in addition to security.

For long years, the separatist terrorist organization has hampered the services rendered to our citizens and has prevented investments from being made in the region.

Following the achievements in the struggle against terrorism, the Turkish government has adopted the following economic and social measures by launching a breakthrough in production, investments and employment in under-developed provinces especially in the Eastern and Southeastern Anatolian regions in order to rapidly heal the wounds of the local people; to increase development in these regions and to reduce differences in the standards of living among the citizens:

1- A new resolution taken by the Council of Ministers is ready for signature in order to revive investments in the region, which have not been completed due to insufficient capital, and are either not operating or partially operating.

This resolution covers a total of 26 provinces including Adıyaman, Ağrı, Ardahan, Bayburt, Batman, Bingöl, Bitlis, Diyarbakır, Elazığ, Erzincan, Erzurum, Gümüşhane, Hakkari, Hatay, Iğdır, Kars, Mardin, Muş, Ordu, Siirt, Sivas, Şanlıurfa, Şırnak, Tunceli, Van and Yozgat.

Under the resolution, a total 10 trillion TL will be transferred from the State Budget to the Investments Incentives Fund for the year 1999 as suitable investments and operating credits for the facilities, which are not in service or partially in service due to insufficient capital, or migration and security reasons mostly in Eastern and Southeastern Anatolian provinces. To this end, a total 30 trillion TL including 20 trillion TL for the year 2000 will be allocated, thus ensuring employment opportunities for 8,200 people.

The investment credits will have a five year term and a grace period of two years for repayment. Operating credits will have a one year term and a grace period of three years.

The annual interest rate for investment credits will be 20%, while the interest rate for operating credits will be 30%.

Previous resolution;

• loans which had been provided for only the manufacturing industry will also cover the health and education sectors, and agricultural industry (excluding cold storage).
• the maximum loan amount, a total of 100 billion TL provided for each investor has been increased to 300 billion TL as the maximum loan available to finance investment and operating costs.
• the actual rate of incomplete investments has been decreased from 75 % to 50 %.

These loans will be used through the Turkish Development Bank.

2- A second new decision by the Council of Ministers has been actioned for interested parties to provide energy support to those firms active in the Eastern and Southeastern Anatolian regions.

Taking into account the 26 provinces included in the decree on firms which are incomplete or are not in service due to insufficient capital investment, this decree also reached the same number of provinces.

The Energy Support Decree, which is still in effect includes only the investment period of companies. As a result of this new decree, Energy Support is also provided during the operating period in order to achieve their transfer from inactive to active production once the companies have finalized their investments.

The reduction rates in energy prices will be 50 % for the first year, 40 % for the second year and 25 % for the third year. Thus, a three-phase implementation has been brought into being.

3- Thirdly, another new decision by the Council of Ministers has been implemented for those who wish to sign up to the Investment Encouragement Board for Small-and Medium-Scale Enterprises.

In addition to 29 provinces within the framework of emergency aid in the previous decree, Hatay, Gaziantep, Ordu and Yozgat are also included, thus increasing the number of provinces to 33.

The limit of investments worth 50 billion TL which is for equipment, upholstery and inventory described in the definition of Small-and Medium-Scale Enterprises has been increased to 100 billion TL.

Credits worth 40 billion TL which have been extended to provinces within the guidelines of emergency aid have increased to 75 billion TL. The maximum credit amounts for provinces which have priority in development will be 60 billion TL, while this figure will be 50 billion TL for other provinces . Furthermore, within these limits, operating credits which amount to 10 billion TL for all regions have been increased to 25 billion TL.

The interest rate in priority-development regions and in provinces within the framework of emergency aid will be 20 %, while it will be 30 % in other regions. The maximum term of investment credits will be four years, while it will be two years for operating credits. There will be a grace period of one year for investment credits.

These credits will be extended through the Turkish Halk Bank.

Moreover, in line with the Tax Law, an article on Value Added Tax (VAT) exemptions has been put into effect for the purchase of machinery and equipment.

During the previous period, new credit facilities which totalled half of the determined credit amount will be available for additional investments to be made by companies benefitting from Small-and Medium-Scale Enterprises credits.

4- A supplementary resolution of the Council of Ministers concerning State Incentives for Investments

As for completely new investments which will at least total an equivalent eight million dollars in Turkish lira and at least 75 workers will be employed will be extended the low interest and long term loans in the State of Emergency Region (OHAL) in all sectors exluding animal husbandry, textile and transportation.

In order to benefit from these loans, investors will receive Incentive Certificates from the General Directorate of the Incentives Applications of the Undersecretary of the Treasury.

The main aim is to attract the attention of investors outside the region. By targetting certain dimensions in investments and employment, a scale effect will be ensured and serious investments will be supported.

5- The Resolution concerning the Establishment of Development and Incentive Funds has been changed.

In order to support the Artisans' Cooperatives, which are actively involved in production, low interest rates and long-term loans will be offered by the Development and Incentives Fund; this will be in line with Small-and Medium-Scale Enterprises following the approval of the Prime Minister. The Turkish Halk Bank will extend this service.

6- Incentives which are extended in order to actuate the potential in the region, to improve alternative job opportunities and to make regional people more productive are of great significance.

Within this of incentives, framework 25,000 families have been ensured work due to the Social Cooperation and Solidarity Incentive Funds given to creative projects such as livestock farming, rug-and-carpet-weaving and vegetable-growing over the last one-and-a-half years in the Eastern and Southeastern regions.

Ten trillion TL is foreseen to be extended by the Social Cooperation and Solidarity Incentives Fund to these projects in the Eastern and Southeastern regions in 1999. As a result of these projects, 40,000 families will be made productive in the region.

In order to benefit from this opportunity, investors should apply to the governor of the province or the municipal authorities.

7- On the other hand, with the aim of improving the economic conditions of the region and the standard of living of the regional people, as well as of creating the suitable conditions for private investments, investment in infrastructure, primarily in education and health, will be accelerated. The measures taken are as follows:

Because of unemployment and terrorism there has been an extensive rural depopulation in Southeastern Anatolia. The reason for this migration is the poor living conditions in rural areas. For this reason those who arrive in the big cities live in unhealthy conditions in ghettos which have no infrastrucuture in place and they then cannot find jobs in order to earn their living.

For this reason, a "Return to the Village and Rehabilitation Project" has been prepared. Within the framework of the project, those families who wish to return to their villages will be determined; infrastructure facilities of the villages will be completed; housing developments will be increased with the participation of the families; and social facilities especially in health and education will be completed to improve the standard of living of the local people.

Moreover, activities such as beekeeping, farming, animal husbandry, handicrafts and carpet weaving will be supported so that these families can earn a living.

With this aim in mind, the Return to the Villages and Rehabilitation Project implemented by the Southeastern Anatolia Project (GAP) Administration, will be included in an Investment Programme.

600 billion TL from the Supplementary Fund has been allocated in order to re-settle 634 families in the GAP region.

The project, to be evaluated by the "Return to the Village and Rehabilitation Sub-regional Development Project", will be included in the GAP Administration's Investment Programme. 60 billion TL were allocated for the project from the Supplementary Fund in 1999.

Furthermore, one trillion TL from the Supplementary Fund has been given to the Rural Affairs General Directorate in order to invigorate the economic life in villages which have been abondoned because of security reasons or terrorist activities in the Eastern and Southeastern regions.

Within the framework of the project, 1017 families will be aided in returning to their villages firstly in Bingol, Hakkari, Tunceli, Bitlis, Van and Mus.

8- Two trillion TL from the Allocation Fund to Accelerate Investments and 747 billion TL from revenues provided under Law No: 3418 have already been extended to the Health Ministry's budget in order to meet the cost of medical equipment and supplies for 24 provinces which are included in the Eastern and Southeastern Anatolia Health Development Project.

Moreover, one trillion TL has been allocated under Law No:3418 in order to establish 112 emergency service units in five provinces, to construct haemodialysis centers in Şırnak, Hakkari and Tunceli, to purchase tomography equipment for the provinces of Agrı and Malatya, to establish early diagnosis and treatment centers for the detection of cancer at maternity facilities in Diyarbakır and Van; to establish the infrastructure of laboratories for the Malaria and Tropical Diseases Hospital in Diyarbakır, and to obtain equipment for the medical unit where tuberculosis is detected and treated in Gaziantep.

Supplementary fund of 2.2 trillion TL have been allocated under Law No: 3418 for the first six months of this year in order to meet the financial requirements of health facilities, the building of which will be continued during the new construction period.

Therefore, within this framework, nearly six trillion TL has been allocated for the first six months of this year in order to improve health services in the Eastern and Southeastern Regions.

9- Apart from the acceleration of investments to implement the eight-year uninterrupted education programme for those schools in the region which were closed for various reasons, the number and student capacity of the regional primary boarding schools will be increased. In addition, the need for student hostels, boarding houses and educational materials will be met. Education centers and hospital schools for handicapped children, specifically there who have been disabled by terrorism in the region, will be opened.

10- The 1999 Investment Programme envisages implementing projects for 197 Organized Industrial Regions, 32 of which will be in Southeastern Anatolia. When these projects now being implemented are completed and begin operating, regional employment opportunities may be available for 450,000 people in 4,700 enterprises.

An additional allocation of 1.2 trillion lira will be provided for eleven Organized Industrial Region Projects in Eastern and Southeastern Anatolia (Erzincan,Kars, Şanlıurfa I, Adıyaman, Bingöl, Diyarbakır,Elazığ II, Malatya Arıtma, and Tunceli Van Kilis), The 288 billion liras of the fund will be obtained from loan repayments, and the remainder will be dotained from reserve budget funds; these funds will be used to employ 32,000 people.

11- Within the 1999 Investment Programme, a total of 211 small-scale industrial regions have been planned, 67 of which will be situated in the East and Southeast Anatolia Region. When the construction of 10,501 workshops in these small-scaleindustrial sites are completed 63,000 people will be able to get jobs. Small scale industrial sites will be allocated 1.7 trillion liras towards their construction in Eastern and Southeastern Anatolia. A part of the fund, 487 billion liras, will be obtained from loan repayments and 1.3 trillion liras will be met by the reserve budget funds. The allocation of additional funds will be used to open 550 shops in 1999, for Small Scale Metal Processing Sites in the provinces of Adıyaman, Erzurum which will employ an additional 3300 people.

12- A sum of 10 trillion liras has been allocated, preeminently by the General Directorate of Rural Affairs. This is as part of the plan to improve village roads, which are by no means adequate at this time.

13- To remedy the shortage of electricity in the region, 25 transmission installations (sub-stations and cable lines) have been put into operation. An additional 11 sub-station and production installations will be completed this year.   Moreover, to maintain an adequate supply of electricity in the region, 4 mobile electric power plants are going to be finished in the shortest possible time. Their construction has been recently contracted out. They will have a total production capacity of 75 Mw.  The shortages will be alleviated when electricity is being used at maximum capacity or during transmission of energy over distances following the completion of these facilities. The resources allocated for the Emergency Contribution Programme will be increased to support small investments and facilities (such as drinking water, bridges, sports facilities and playgrounds for children) which will provide jobs, income and improve the life-style of the people in the region.

14- The lack of qualified personnel employed in the public sector in the region will be remedied; the needs of civil servants working in the region, such as housing and camping facilities will be met. 40.5 trillion liras has been allocated to finance the afore-mentioned activities and works. Of this sum, 25.9 trillion TL will be provided by the budget, 10 trillion from the Incentive Fund for Social Cooperation and Solidarity, 3.9 trillion from income provided by the implementation of Law No: 3418, and 700 billion liras from loan repayments to the Operational Funds for Small Scale Industrial Sites and Organized Industrial Regions.