Fears that Turkey could lose out on a multibillion dollar aid package after its parliament refused to allow in more than 60,000 U.S. troops caused its markets to plunge early Monday.

Associated Press

ISTANBUL, Turkey — Fears that Turkey could lose out on a multibillion dollar aid package after its parliament refused to allow in more than 60,000 U.S. troops caused its markets to plunge early Monday.

Turkey's stock exchange dropped by 11.3 percent by midday and its currency, the lira, dipped by about 5 percent to 1,654,000 to the dollar, traders said.

The government on Saturday failed to gather enough support among its ruling party lawmakers for parliament to authorize the deployment of more than 60,000 U.S. troops ahead of a possible Iraqi war. Parliament's decision stunned Washington and seriously jeopardizes U.S. planning for a northern front against Iraq, a crucial part of the American war strategy.

Prime Minister Abdullah Gul on Monday refused to say whether the motion would be resubmitted to parliament.

"We are analyzing the situation and we will see what happens in the next few days," Gul said in a news conference.

A top member of Turkey's governing Justice and Development Party, Eyup Fatsa, said Sunday that a new vote in parliament was not planned for the "foreseeable future." But Turkey's Foreign Minister Yasar Yakis appeared to leave the door open for a new vote.

Asked if the proposal would be back on the agenda this week, Yakis said, "The process (of evaluation) will be completed, then it will come." He did not elaborate.

A Justice lawmaker, Elsonmez Yarbay, said Monday that more concessions were needed from Washington for legislators to approve the deployment.

Turkish and U.S. officials negotiated for weeks on the military, economic and political conditions of the deployment. A Western diplomat, speaking on condition of anonymity, said Washington believed an agreement had been reached and no further negotiations were expected.

Saturday's vote could mean the end of a $15 billion package in grants and loans promised by Washington to compensate Turkey for any losses incurred in war if Turkey authorized the troop deployment.

Turkey's markets were counting on that money to boost the country's ailing economy and help it out of a deep economic crisis.

Gul tried to reassure the markets, stating that Turkey would have no difficulties in repaying its large international debts if the U.S. aid plan does not come through.

"We have to separate the motion (authorizing the troop deployment) from the economy," Gul said.

Economists said they expect the markets to continue to fall, although at a slower rate.

"If we see any convincing positive statement from the government regarding the authorization and the United States continues to be patient I think there's a chance that the markets recuperate," said Tevfik Aksoy of Global Securities.

In an attempt to calm the markets, Gul also announced that the Cabinet had finished work on the 2003 budget and vowed to stick by strict reforms demanded by the International Monetary Fund, such as increasing transparency in the public sector and cutting spending.

Juha Kahkonen, the IMF's chief for Turkey, immediately welcomed the premier's statement.

Several newspapers reported Monday that the motion to allow in U.S. troops would not be brought back to parliament before Sunday's by-elections that are expected to pave the way for Justice party leader Recep Tayyip Erdogan to become prime minister.

Daily Sabah reported that the motion could be delayed until March 17, which would allow Turkey to also wait to see if a second resolution is approved by the U.N. Security Council.

The Islamic-rooted ruling party is in disarray, torn between popular opposition to war and fears of possible lasting damage to the historically close ties with Washington.

Ships carrying equipment and some of the 62,000 U.S. troops who would be based in Turkey are already off the Turkish coast, a sign of how sure Washington was of Turkish support.

Gul spoke with Secretary of State Colin Powell on Sunday about the deployment of U.S. troops.

According to a written statement from the prime minister's office, Powell thanked the government for its efforts on the motion and "emphasized that relations between friends Turkey and the United States were solid."

For Turkey, in addition to the possible loss of a huge tranche of U.S. funds, Ankara could lose a say in the future of neighboring Iraq if there is a war.