6 BYZANTINE ENERGY POLITICS: THE COMPLEX TALE …
161
competitive energy market by unbundling the Turkish Electricity Generation Transmission Co. (TEAS) monopoly into three companies responsible for generation, wholesale trading, and transmission; by outlining
the major steps to privatize state’s distribution and generation assets;
and by creating an autonomous regulatory body, namely the Electricity
Market Regulatory Authority (EMRA) to minimize political interference in market decisions and administer energy production permits in an
objective and transparent manner. Along these lines, many other energy
reforms, i.e., the Natural Gas Market Law #4646, and the Renewable
Energy Law of 2005, followed.
The crisis also empowered the international financial institutions,
which emerged as powerful external anchors for fundamental fiscal and
institutional reforms. Confronted with a high unemployment rate and
burgeoning external and domestic debt, the Turkish government resorted
to International Monetary Fund (IMF) and World Bank financing to
avoid a debt default. These donor agencies required power sector
reforms and privatization of state assets as a precondition of their assistance packages. A new crisis management program sanctioned by IMF
began in April 2001, when the then-Vice President of the World Bank,
Kemal Dervis, became the Turkish Treasury Minister. When government
changed hands in 2002, IMF continued its pressure by withholding the
release of the next loan disbursement. Left with few choices, the new
AKP government deepened the IMF structural reforms, which included,
among others, further deregulation, privatization, and restructuring of
the energy market.
Consequently, the World Bank, International Bank of Restructuring
and Development, German Development Bank, and the Council of
Europe Development Bank provided substantial financial support for
renewable projects in Turkey. 30 US foreign policy and geostrategic interests in keeping Turkey stable in the Middle East in the post 9/11 global
environment was also instrumental in getting significant funds and favorable repayment conditions from these international organizations. The
unusually favorable global liquidity environment, thanks partly to US
Fed’s expansionary monetary policy, enabled the AKP government to
attract large sums of foreign capital. 31 Availability of cheap loans allowed
Turkish capitalists to buy out privatized public assets and build power
plants more easily.
It is important to also stress the role of the European Union (EU)
in kickstarting the renewable energy industry as the energy reforms
161
competitive energy market by unbundling the Turkish Electricity Generation Transmission Co. (TEAS) monopoly into three companies responsible for generation, wholesale trading, and transmission; by outlining
the major steps to privatize state’s distribution and generation assets;
and by creating an autonomous regulatory body, namely the Electricity
Market Regulatory Authority (EMRA) to minimize political interference in market decisions and administer energy production permits in an
objective and transparent manner. Along these lines, many other energy
reforms, i.e., the Natural Gas Market Law #4646, and the Renewable
Energy Law of 2005, followed.
The crisis also empowered the international financial institutions,
which emerged as powerful external anchors for fundamental fiscal and
institutional reforms. Confronted with a high unemployment rate and
burgeoning external and domestic debt, the Turkish government resorted
to International Monetary Fund (IMF) and World Bank financing to
avoid a debt default. These donor agencies required power sector
reforms and privatization of state assets as a precondition of their assistance packages. A new crisis management program sanctioned by IMF
began in April 2001, when the then-Vice President of the World Bank,
Kemal Dervis, became the Turkish Treasury Minister. When government
changed hands in 2002, IMF continued its pressure by withholding the
release of the next loan disbursement. Left with few choices, the new
AKP government deepened the IMF structural reforms, which included,
among others, further deregulation, privatization, and restructuring of
the energy market.
Consequently, the World Bank, International Bank of Restructuring
and Development, German Development Bank, and the Council of
Europe Development Bank provided substantial financial support for
renewable projects in Turkey. 30 US foreign policy and geostrategic interests in keeping Turkey stable in the Middle East in the post 9/11 global
environment was also instrumental in getting significant funds and favorable repayment conditions from these international organizations. The
unusually favorable global liquidity environment, thanks partly to US
Fed’s expansionary monetary policy, enabled the AKP government to
attract large sums of foreign capital. 31 Availability of cheap loans allowed
Turkish capitalists to buy out privatized public assets and build power
plants more easily.
It is important to also stress the role of the European Union (EU)
in kickstarting the renewable energy industry as the energy reforms