An Analysis of Turkeys Tourism Sector

and the Impact of Externalities

By

Refet Duygu Erdemgil









Submitted in Partial Fulfillment of the Requirements
for International Commerce and Policy


Advisor: Dr. Matthys van Schaik

Capstone Coordinator: Dr. Todd M. La Porte



George Mason University

Summer 2002



i


TABLE OF CONTENTS


Page Number

Abstract ii

Map of Turkey iii

Introduction 1

Section One 3
World Tourism in Brief 3
The Turkish Tourism Sector 6

Section Two 15
The 1991 Gulf War 15
The 1999 Earthquake 18

Section Three 21
The Terrorist Attacks of September 11 21
Possible U.S. Attack on Iraq 24
The IMF Support 29

Conclusion 34

Bibliography 37







ii
Abstract

This paper examines the importance of the tourism sector in Turkey using quantitative
and qualitative data. Additionally, the effects of certain events in Turkeys recent history (1990-
2002) on the tourism sector are discussed. Finally, the likely impact of a possible U.S. military
action against Iraq on the Turkish economy, and especially on its tourism industry is explored.

This paper proceeds with an outline of the tourism sector. Specifically, the importance of
the tourism sector in relationship to the economy as a whole is highlighted. Data will show how
the negative effects of some events of the past curtailed Turkeys tourism industry and how
possible developments might curb its advancement in the future.












iii
Turkey
1


Location: southeastern Europe and southwestern Asia (that portion of Turkey west of the
Bosporus is geographically part of Europe), bordering the Black Sea, between Bulgaria
and Georgia, and bordering the Aegean Sea and the Mediterranean Sea, between
Greece and Syria

Geographic
coordinates:

39 00 N, 35 00 E

Area:

total: 780,580 sq km
land: 770,760 sq km
water: 9,820 sq km

Area comparative:

slightly larger than Texas

Land boundaries:

total: 2,627 km
border countries: Armenia 268 km, Azerbaijan 9 km, Bulgaria 240 km, Georgia 252
km, Greece 206 km, Iran 499 km, Iraq 331 km, Syria 822 km

Coastline:

7,200 km

Climate:

temperate; hot, dry summers with mild, wet winters; harsher in interior

Terrain:

mostly mountains; narrow coastal plain; high central plateau (Anatolia)


1
Central Intelligence Agency. World Factbook. (Washington, D.C. 2001).
1

INTRODUCTION

Turkey, a country that sits on two continents, serves as a literal and figurative bridge
between the East and the West. As the weekly National Journal magazine points out, Turkeys
two-world contrast between Eastern traditionalism and Western modernity are apparent
everywhere and are integral to Turkeys unique character.
2
The history of Turkey dates back
centuries. Many historians and archeologists have flocked to this country to study the numerous
civilizations of the world whose roots are found in Turkey. Author Stephen Kinzer wrote,
Nowhere does history delight in them as fully as in the land now called Turkey.
3
Indeed, in
Turkey, one can find the well-preserved histories of the Hittites, Lydians, Romans, Byzantines,
Ottomans and modern-day Turks. They have all left their marks on this land and have provided
Turkey, also referred to as Anatolia, with scores of historical sites.

The cradle of civilization, as Anatolia has also been called, has attracted its peoples as a
result of its geographic topography. The land provided the resources for the development of
many diverse civilizations. Turkey is surrounded by three seas: The Mediterranean in the south,
the Aegean in the west and the Black Sea in the north. The two continents, Europe and Asia, are
separated by the straits of Dardanelles and Bosporus.
4
Turkeys climate provides four seasons.
Moreover, the hospitality and friendliness of its present-day inhabitants complement the history
and nature. Therefore, with all these characteristics, it is not surprising that millions of
foreigners visit the country each year.

2
James Kitfield, The Turkish Model, National Journal, March 2, 2002, 9.
3
Stephen Kinzer, Crescent & Star (New York: Farrar Strauss & Giroux, 2001), 57.
4
Turkey Yearbook 2000, Turkish Prime Ministry, Directorate General of Press and Information.


2
However, due to circumstances beyond Turkeys control, Turkeys tourism sector has
occasionally had economic ups and downs as a result of a series of events throughout the 1990s.
All in all, the Turkish tourism industry has made great strides since the implementation of free
market and liberal economy policies starting in the early 1980s. Beginning in 1990 and owing to
modern infrastructural developments and peoples desire to travel more, the tourism sector has
proven itself to be a profitable area. It is now perceived as one of the main pillars of the Turkish
economy that is passing through difficult times. The Turkish economys dependence on tourism
makes it an invaluable sector. Yet, on several occasions the Gulf War of 1991, the earthquake
of 1999 and the terror attacks of September 11, 2001 the tourism sector was confronted with
severe blows and this obviously hurt the economy as a whole. Now, another set of dark clouds is
looming over Turkeys tourism sector. There are strong signs that the U.S. will strike militarily
against Iraq in the near future, a probability that makes the outlook for Turkeys tourism sector
somewhat disheartening.












3
SECTION ONE
World Tourism in Brief

Although there is no single definition of tourism, according to the World Tourism
Organization (WTO), tourism comprises the activities of persons traveling to and staying in
places outside their usual environment for not more than one consecutive year for leisure,
business and other purposes.
5
A tourist, on the other hand, is a visitor who stays at least one
night in collective or private accommodation in the country visited.
6
The WTO, which
represents 139 countries, is an affiliate of the United Nations and is considered to be a global
forum for tourism policies and issues. Tourism could also be depicted as an industry that
provides a platform for the interaction of tourists with local businesses and communities of host
countries.

According to the book, Tourism and Sustainable Economic Development, Tourist
activity is essential for its direct effects on the social, cultural, educational and economic sectors
of individual countries, and on international relations throughout the world, and as such it is of
primary interest to the collectivity and justifies an important public intervention.
7
As Chart 1
shows, tourism has become the worlds largest industry. The global economic prosperity and the
desire of people to travel more extensively has made tourism the leading earner of exports, even
ahead of giant industries such as automotive, chemicals, food, fuel and computers.


5
World Tourism Organization, www.world-tourism.org.
6
World Tourism Organization.
7
Amadeo Fossati , et al., Tourism And Sustainable Economic Development (Norwell, MA: Kluwer, 2000), 5.



4
Chart 1




Table 1 indicates that in 2000 the U.S. led the world in tourism receipts. The total number
of tourists who visited the top 15 countries amounted to nearly 300 million people out of almost
700 million international tourists.
8
Their total market share was about 61%.

For many countries, including Turkey, international tourism has become a consistent
source of foreign currency and often a much-needed remedy to improve economic conditions of
those nations.
9
Though its tourism industry could still be considered very young, for Turkey, 7.6
million tourists and a market share of 1.6% in 2000 were signs of positive performance.
Additionally, taking part in a list of such advanced nations has meant worldwide recognition as a
favorable tourist destination.




8
World Tourism Organization.
9
J. Diamond, Tourisms Role in Economic Development: The Case Reexamined, Economic Development and
Cultural Change, v25, n3 (April 1977): 539-53.


5
Table 1
World's Top 15 Tourism Earners
International Tourist
Arrivals (million)
Rank
1999
Country
1999 2000
Change
(%)
2000/1999
Market Share
(%)
2000
1 United States 74.9 85.2 13.7 17.9
2 Spain 32.4 31.0 -4.3 6.5
3 France 31.5 29.9 -5.1 6.3
4 Italy 28.4 27.4 -3.2 5.8
5 United Kingdom 20.2 19.5 -3.4 4.1
6 Germany 16.7 17.8 6.5 3.7
7 China 14.1 16.2 15.1 3.4
8 Austria 12.5 11.4 -8.7 2.4
9 Canada 10.2 10.8 5.9 2.3
10 Greece 8.8 9.2 5.0 1.9
11 Australia 8.0 8.4 5.3 1.8
12 Mexico 7.2 8.3 14.8 1.7
13 Hong Kong 7.2 7.9 9.4 1.7
14 Turkey 5.2 7.6 46.8 1.6
15 Russian Federation 7.5 - - -
Source: World Tourism Organization

According to data released by the World Tourism Organization in June 2002, Chart 2,
international tourist arrivals in 2001 were 693 million, 4 million less than 2000. As an
unexpected externality, the main reason for this decline was September 11 terrorist attacks
against the U.S. Indeed, a representative from the U.S. Department of Commerces Office of
Tourism and Travel Industries, who declined her name to be used, said, It is predicted that it
will take until 2005 to regain the same level of American outbound travel as if September 11


6
never happened. She also said that she was certain that there would be a decrease in the number
of American tourists traveling abroad if there is a U.S. attack on Iraq.
10


Chart 2

Source: World Tourism Organization

The Turkish Tourism Sector

The Turkish tourism sectors development can be divided into the following periods:
Strong etatist policy (1923-50); guarded liberalization (1950-60); planned economy (1960-80);
transition to private entrepreneurship (1980-90); and private sector dominance and liberal
economic policy (1990-present).
11
Turkey really started incorporating tourism into its economic
policy in early 1960s. However, it took at least two decades to draw up tourism development

10
U.S. Department of Commerce, International Trade Administration, Office of Tourism and Travel Industries,
Telephone Interview with a Representative, September 4, 2002.
11
Yorghos Apostolopoulos, et al., Mediterranean Tourism: Facets of socioeconomic development and cultural
change (New York: Routledge, 2001), 93-94.
International Tourist Arrivals - World
580
600
620
640
660
680
700
720
1998 1999 2000 2001
Years
M
i
l
l
i
o
n
s


7
and infrastructure projects. As of 1983, the government adopted important guidelines of tourism
policy such as creating a highly competitive tourism sector, developing tourism facilities,
preserving natural sites and encouraging the people in this sector by providing them with
economic incentives.
12


The main achievement was the introduction of a free market economy. Since then,
increasingly market-oriented policies have been pursued. The government implemented a series
of reforms aimed at economic liberalization and this paved the way for foreign businesses to
invest heavily in Turkey. This transformation helped the tourism industry and infrastructure to
develop itself. Infrastructure reforms such as the boom of foreign and domestic owned 5-star
hotels between 1980 and 1990 have been a great encouragement to the economy. The foreign
hotels in Turkey are a form of highly desired foreign direct investment (FDI). In 2000, the
tourism sectors share of total FDI in the services sector was 8.4%.
13


Turkeys tourism sector relies heavily on FDI. Whether or not Turkey can sustain its
growth relies on a few important principles. Capital flows to the tourism sector can be obtained
from domestic and foreign investors. However, their interest in investing in Turkey will rely
mainly on several factors such as increases in the number of visitors, regional and environmental
stability, a strong return on their investment and a stable economy and government.


12
Turkish Export Promotion Center (IGEME), www.igeme.org.
13
Turkey 2001, An International Comparison, Foreign Economic Relations Board (Lebib Yalkin, 2002).


8
With time, tourism has become Turkeys second largest source of foreign currency after
textiles.
14
However, over the years, unexpected and sudden circumstances, including
international quarrels and natural disasters, have impeded the further development and growth of
Turkish tourism causing fluctuations in the tourism sector.

Chart 3
Source: Turkish Ministry of Tourism

Chart 3 shows a considerable increase in tourism revenues over a twelve-year period.
Starting in 1992, which is post-Gulf War, Turkeys tourism revenues have shown a positive
growth rate. The exceptions are a slight decline in 1991 and a significant drop in 1999, when a

14
Robert R. Miller, The Private Sector and Development: Five Case Studies, International Finance Corporation
Publications.

Turkey's Tourism Revenues
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Years
M
i
l
l
i
o
n
s

U
S
D


9
disastrous earthquake hit western Anatolia. In fact, it fell into the 1995 level, but bounced back
nearly 40% and exceeded $8 billion in 2001.

Table 2 highlights the growth of hotels in Turkey. Specifically, the number of hotel beds
showed an impressive growth rate throughout the 1990s. The number of beds nearly doubled in
ten years.

Table 2
Source: Turkish Ministry of Tourism

The occupancy rates of these hotels are also important. Chart 4 demonstrates the
fluctuations of hotel occupancy for the years 1990 to 2000. In 2000, the occupancy rate was
40%. This suggests that there is room to grow at potentially lower rates. The supply of these
rooms outweighs the demand for them.





1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
No of Hotels 1260 1404 1498 1581 1729 1793 1866 1933 1954 1907
Growth Rate 14.34% 11.43% 6.70% 5.54% 9.36% 3.70% 4.07% 3.59% 1.09% -2.41%
No of Hotel Beds 173227 200678 219940 235238 265136 280463 301524 313298 314215 319313
Growth Rate 18.58% 15.85% 9.59% 6.76% 12.71% 5.78% 7.51% 3.90% 0.29% 1.62%


10
Chart 4

Source: Association of Turkish Travel Agencies

One of the reforms that helped the foreign visitors has been Turkeys acceptance of
Article 8 of the International Monetary Fund (IMF). This article is referred to as the
Convertibility Principle and it stipulates that both domestic and foreign currency should circulate
freely within the country and abroad without any substantial restrictions. Other practicalities
have included widespread use of ATMs and acceptance of credit cards, enabling convenient
payment locally. The bank would convert the bill from Turkish lira into U.S. dollars for the
tourists monthly statement. From an economic development perspective, in light of these
Occupancy Rates of Hotels in Turkey
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Years
P
e
r
c
e
n
t
a
g
e


11
actions, the Turkish government provided domestic businesses with an excellent selling point to
attract foreign visitors.
15


The Turkish government is also working on reforms to finance more tourism promotion
events. For instance, the 2003 Asian Development Banks annual meeting will be held in
Istanbul. This is a good opportunity to promote the country. The private and banking sectors in
Turkey are heavily involved in promoting tourism. They sponsor many events for the cause, as
they are often the largest benefactors of increased tourism. The foreign exchange receipts
deposited in their banks allow them to increase lending, and therefore boost profits.

Chart 5
Comparison of Turkish Lira and the Number of Tourist Arrivals







Source: World Bank Development Indicators 2000



15
Umit Gonulal, Economic Counselor, Turkish Embassy, Washington, D.C., Personal Interview, July 12, 2002.
0
2000000
4000000
6000000
8000000
10000000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Year
#

o
f

A
r
r
i
v
a
l
s

0
100000
200000
300000
400000
500000
T
u
r
k
i
s
h

l
i
r
a
International tourism, number of arrivals
Official exchange rate (LCU per US$, period average)


12
In 1994 and 2001, Turkey suffered a sharp depreciation in the Turkish lira. The
weakening Turkish lira has made Turkey appealing as a tourist destination since foreign currency
bought more Turkish lira. Chart 5 compares the devaluation of the Turkish lira against the USD
to the number of tourist arrivals.
16
Despite the depreciation of the Turkish lira, the number of
tourists visiting decreased in 1999 due to a major earthquake. The affordability of the Turkish
lira was an important factor in attracting tourists to visit Turkey. Using the data provided in
Chart 5, the correlation factor between the two variables was 0.527 between 1990 and 1999. If
the formula is modified to include 1990-1998, the correlation factor rises to 0.867. This suggests
that foreign tourists who traveled to Turkey between 1990 and 1998 considered the affordability
aspect prior to their travels. However, when 1999 data is included in the formula tourists also
take safety into consideration that will be discussed in the earthquake section of this paper.

Table 3
Number of Visitors and Tourism Receipts


















Source: Association of Turkish Travel Agencies


16
World Bank Development Indicators 2000, CD-ROM.
Years
Visitors
(thousands)
Change %
Receipts
(million $)
Change %
1990 5,389 20.9 2,705 5.8
1991 5,517 2.4 2,654 -1.9
1992 7,076 28.3 3,639 37.1
1993 6,500 -8.1 3,959 8.8
1994 6,670 2.6 4,321 9.1
1995 7,726 15.8 4,957 14.7
1996 8,614 11.5 5,650 13.9
1997 9,689 13.0 7,080 23.9
1998 9,752 0.7 7,177 2.0
1999 7,464 -23.5 5,193 -27.6
2000 10,412 39.0 7,636 47.4
2001 11,569 11.0 8,090 5,9


13
The tourism sector in Turkey has shown important progress in the past 12 years. As Table
3 indicates, despite noticeable declines in 1991 (the Gulf War), 1999 (the earthquake) and 2001
(the September 11 attacks), the number of foreign visitors between 1990 and 2001 increased by
more than 100%, while the tourism receipts grew almost 300%. In other words, both the number
of tourists and their expenditures increased. These are positive attributes of the Turkish tourism
sector during this time period.

The emphasis on the tourism industry is a well-aimed effort. However, agriculture is
crucial for Turkey too. Farmers make up 45% of the population, though they only contribute
16% to Turkeys GNP.
17
Turkey knows that it cannot solely rely on agriculture for wealth and
development, and needs to optimize these two vital industries for the benefit of its citizens.

Agriculture, historically, has been the countrys largest sector and a major contributor to
its GDP. However, in recent years there has been a shift from agriculture to tourism and other
services. The reason for the decline partly could be attributed to unproductive agricultural
enterprises. Industrial developments and advancement of tourism also have an important role in
general fall of agriculture.
18


The latest data, Chart 6, from the State Institute of Statistics, which is affiliated with the
Turkish Prime Ministry, indicates that while there was a decline in agricultural employment
compared to previous years, the services sector slightly increased, according to the results of the
first quarter of 2000.

17
Turkish Prime Ministry, State Institute of Statistics, www.die.gov.tr.
18
Turkish Prime Ministry, Undersecretariat of Treasury, www.treasury.gov.tr.


14
Chart 6

Source: Turkish Prime Ministry, State Institute of Statistics

From a macroeconomic perspective, tourism is considered to be a volatile sector and
therefore cannot fully make up an economy. It is vulnerable to external effects such as wars and
natural disasters as well as general economic conditions at home and abroad, exchange rates, etc.
as opposed to other sectors like manufacturing and agriculture. Certainly, many sectors are
affected by wars and natural disasters and tourism is no doubt one of them, as it is highly
susceptible to negative externalities. Second, a viable and sustainable tourism industry requires
high capital investments including infrastructure development and transportation. Finally,
tourism employment is often seasonal. Tourist destinations rely on the will of a person to
consume their environment. Therefore, Turkey experiences a fluctuation in the employment rate
based on the willingness of foreign tourists to arrive at its borders.




15
SECTION TWO
The Gulf War

In August 1990, Iraq invaded Kuwait, prompting retaliation by the United States and its
allies with Operation Desert Storm in January 1991. They defeated Iraq and forced it to leave
Kuwait. Turkey, a NATO ally of the U.S., supported Washingtons campaign against Baghdad
and provided the U.S. with access to Turkish military bases. In response to the United Nations
Resolutions, Turkey shut down the Iraqi pipeline and cooperated with the international sanctions
imposed against the Baghdad regime.

The war severely damaged the Turkish economy. Turkey was importing most of its oil
from Iraq relatively cheaper than market prices and also charging pipeline transit fees for the
Iraqi oil exports. Turkey was also Iraqs largest trading partner. As a result, Turkey suffered the
loss of tens of billions of dollars in trade and revenues.
19
In 1990, before the Gulf War, the
annual capacity of Iraqi oil that flowed through two pipelines to a Turkish petroleum terminal on
the Mediterranean coast was almost 340 million barrels. Due to the sanctions imposed against
Iraq, from 1991 to 1995, not a single drop of oil was transported through the pipelines. A United
Nations Resolution in 1996 has permitted gradual transportation.
20
Consequently, the economic
losses that the country faced could only be offset by the fervor of the tourism industry.

Turkey entered the 1990s with impressive tourism statistics. The Gulf War was an
unexpected blow to Turkish tourism in 1991. For some, the impact was temporary due to the

19
Turkish Ministry of Foreign Affairs, www.mfa.gov.tr.
20
Turkish Petroleum Pipeline Corporation (BOTAS), www.botas.gov.tr.


16
shortness of the war. By 1995, arrivals were greater than 7.7 million and foreign exchange
receipts were more than $5 billion.
21
But for others, the wars economic effects were severe.
According to Sinan Aygun, president of Ankara Chamber of Commerce, before the Gulf War
Turkeys export revenue from Iraq was $5 billion annually. Multiply that by 12 years, and we
have lost about $60 billion. For the sake of being on better terms with the U.S., we ended up
being on really bad terms with Iraq, he said.
22




Source: Turkish Ministry of Tourism

Whether civil or international, wars have had some of the most adverse effects on
tourism. The Gulf War not only deterred most tourists from visiting Middle Eastern countries,

21
Yorghos Apostolopoulos, et al., Mediterranean Tourism: Facets of socioeconomic development and cultural
change (New York: Routledge, 2001), 105.
22
R. Working, Turks Wary of War in Back Yard, The Baltimore Sun, March 27, 2002.
Table 4
Number of Visitors
(thousands)
Country 1990 1991 1992
Germany 973 779 1165
U.K. 351 200 314
United States 205 79 182
Number of Visitors' Index
Country 1990 1991 1992
Germany 100.0 80.1 119.7
U.K. 100.0 57.0 89.5
United States 100.0 38.5 88.8


17
but also raised fears of terrorist attacks on airports used by American travelers, according to the
book, Tourism and Society: A Guide to Problems and Issues.
23
As Table 4 illustrates, the Gulf
War significantly reduced the number of foreign visitors from the three selected countries in
1991. The war particularly deterred Americans from traveling to Turkey. Close to 60% of
Americans, 45% of British and 20% of Germans who had visited the country the previous year
either chose other destinations or stayed home. Though hesitantly, they started returning the next
year. In the following years, the number of tourists from those countries picked up speed.

Source: OECD/GD (97)172, Tourism Policy and International Tourism in OECD Countries


23
Robert W. Wyllie, Tourism and Society: A Guide to Problems and Issues (Pennsylvania: Venture, 2000), 122.
Ta bl e 5
1 9 8 9 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5
Ar r i v a l s o f f o r e i g n t o ur i s t s / v i s i t o r s a t f r o nt i e r s f r o m t he Uni t e d St a t e s ( i nde x e s )
Ca n a d a 9 9 . 4 9 8 9 6 . 5 9 8 . 1 1 0 2 . 4 1 0 6 . 2
Aus t r a l i a 1 0 4 1 0 8 . 4 1 0 4 . 9 1 1 2 . 2 1 1 4 . 2 1 2 0 . 8
Ne w Ze a l a n d 9 8 . 5 9 5 9 4 . 1 1 0 2 . 8 1 1 3 . 5 1 0 9
F r a n c e 1 0 8 . 2 8 2 1 0 0 . 5 9 8 . 6 1 1 5 . 9 1 0 9 . 2
I t al y 9 5 . 5 8 0 . 1 9 1 . 1 8 5 . 2 9 0 . 9 9 7 . 4
T u r k e y 9 9 . 4 3 8 . 5 8 8 . 6 1 2 3 . 9 1 3 1 . 7 1 4 1
Ar r i v a l s o f f o r e i g n t o ur i s t s / v i s i t o r s a t f r o nt i e r s f r o m t he Uni t e d Ki ng do m( i nde x e s )
Ca n a d a 1 0 3 9 5 . 9 9 7 1 0 1 . 5 1 0 4 . 2 1 1 5 . 8
Aus t r a l i a 9 8 . 2 9 4 . 9 1 0 4 . 3 1 1 1 . 7 1 1 8 . 6 1 2 3 . 4
Ne w Ze a l a n d 8 5 . 2 1 0 0 . 8 1 1 0 . 6 1 1 8 . 5 1 3 3 1 4 0 . 3
F r a n c e 8 7 . 6 1 0 0 . 1 1 0 2 . 6 1 0 6 . 7 1 5 4 . 1 1 3 8 . 1
I t al y 9 3 . 1 8 3 . 6 7 8 . 8 8 4 . 9 8 8 8 2 . 5
T u r k e y 1 1 5 . 5 5 7 . 1 8 9 . 5 1 2 5 . 7 1 6 1 . 7 2 0 9
Ar r i v a l s o f f o r e i g n t o ur i s t s / v i s i t o r s a t f r o nt i e r s f r o m Ge r ma ny ( i nde x e s )
Ca n a d a 1 0 7 . 3 1 0 8 . 5 1 1 5 . 5 1 3 4 . 7 1 4 6 . 1 1 6 7 . 4
Aus t r a l i a 9 1 . 8 1 0 4 . 7 1 2 1 . 2 1 4 2 . 3 1 6 4 . 7 1 6 6 . 8
Ne w Ze a l a n d 7 9 . 2 1 1 4 . 4 1 5 2 . 4 1 8 7 . 3 1 9 7 . 6 1 8 3 . 2
F r a n c e 1 0 0 . 3 1 1 0 . 8 1 2 0 1 2 3 . 7 1 0 3 . 8 1 0 0 . 4
I t al y 9 4 . 9 8 6 . 2 8 2 . 3 7 2 . 1 7 7 . 8 8 2 . 5
T u r k e y 9 2 . 1 8 0 . 1 1 1 9 . 6 1 1 4 . 9 1 0 2 . 1 1 7 0 . 1


18
Table 5 shows some of the travel destinations of tourists from the U.S., U.K. and
Germany between 1989 and 1995. The trend in 1989 did not continue in 1991 due to the Gulf
War. Visitors from the U.S., for instance, traveled much less in 1991. Among the selected six
countries that were visited by the tourists from three nations during that year, the country with
most dramatic slide in the visitors index was Turkey, a neighbor to Iraq.

The Gulf War proved that international conflicts can financially hurt many countries
whose economies are dependent on tourism. Also, the nearer a country to the war zone meant the
greater the damage. In Turkeys case, a country with so much dependence on its tourism sector
and who happens to be in close proximity to the area of conflict, the harmful effects were more
than what had been predicted. Despite a speedy recovery of the tourism sector the following
year, the Gulf Wars lingering impact on other sectors of the economy was felt.

The 1999 Earthquake

In August 1999, Turkey was faced with another significant challenge. The nation
suffered a massive and devastating earthquake in the western region of the country. More than
17,000 people lost their lives. The estimated cost of the quake was at least $25 billion.
Hundreds of thousands of people were left homeless. The area affected by the earthquake is as
large as Belgium and Denmark combined, and 23% of the Turkish population lives there.
24




24
Baki Ilkin, Turkish Ambassador, Speech, Washington, D.C., January 18, 2000.


19
Turkey is located on a major fault line. Essentially, this means that it is always under
threat of another earthquake. There is nothing Turkey could do to prevent this natural disaster
from happening, modern-day science has not found a detection method for earthquakes yet.
However, the illegal and irregular construction of buildings posed a larger problem, as evidenced
by ancient buildings largely unaffected. The Turks heavily criticized the government for the lack
of authority and efficiency. Reforms in the field were promised, however there was not much
accomplishment.
25
The quake occurred at a time when the Turkish economy was improving.
Prior to the disaster, increased foreign investments had made economic recovery seem close.
Affected areas accounted for more than one-third of Turkeys economic activity as this region is
regarded as the industrial heartland of the nation.

Consequently, another setback to Turkeys tourism sector was unavoidable. The upward
trend that started in 1992 came to a halt, then slid downwards. The occupancy rates of hotels in
Turkey decreased (Chart 4) and people in the tourism business suffered important losses. The
vendors inside the famous Covered Bazaar were pleading with those who passed to purchase
Turkish rugs, silver jewelry and silk scarves. Many vendors went days, or even weeks, without
making a sale.
26


Due to the earthquake, as Table 6 highlights, tourism revenues in 1999 fell to 1995 levels.
The number of foreign visitors declined by more than 20% compared to the previous year. The
loss of foreign currency, which amounted to $2 billion less than 1998 figures, decreased

25
R. Jeffrey Smith, Turkish Government Fails Quake Test, The Washington Post, August 29, 1999, p. A1.
26
Stephanie Kinner, Staff Writer, DisasterRelief.Org, September 1, 1999.


20
government revenues and therefore further exacerbated the economic woes the nation was
facing. In the aftermath of the earthquake, shopkeepers and hotels had to lower their prices to
entice tourists back with bargains. This follows the theory of supply and demand; a leftward shift
in the demand curve occurs. This would reflect a decrease in the demand for the goods and
services offered. Consequently, this would force suppliers to lower their prices to achieve an
increase in demand.

Table 6

Number of Visitors and Tourism Receipts











Source: Turkish Ministry of Tourism

Being prepared for a natural disaster could save lives and property. But still a natural
disaster could hit any place, at any time in the world disregarding destruction of life and
economic losses it might cause. In Turkeys case, an earthquake in 1999 affected its tourism
sector. Tourism revenues fell nearly 30% compared to 1998. However, revenues increased by
more than 45% the following year. These indicators again show how dynamic and attractive the
tourism industry is despite occasional natural obstacles.



Years
Visitors
(thousands)
Receipts
(million $)
1995 7,726 4,957
1996 8,614 5,650
1997 9,689 7,080
1998 9,752 7,177
1999 7,464 5,193
2000 10,412 7,636


21
SECTION THREE
The Terrorist Attacks of September 11

On September 11, 2001, terrorists hijacked four commercial planes and hit the twin
towers of the World Trade Center in New York and the Pentagon in Washington and a fourth
one crashed in Pittsburgh. As a result, thousands of people perished. This was the largest
terrorist attack against the U.S. on its own soil in history. The U.S. government subsequently
declared a war on terrorism. The Turkish government stressed that it was supporting the U.S.
fully in its war against terrorism.
27
Turkey easily could relate to the situation the Americans
were in, for it had gone through a 15-year struggle with the Kurdish terrorist organization-PKK.
The PKK terror had cost 30 thousand Turkish lives. Therefore, the Turks understood probably
better than any other nation the pain the Americans felt.
28


It was discovered that al-Qaeda and Osama bin Laden were behind these attacks. The
terrorist organization, al-Qaeda, was based in Afghanistan. In November 2001, the U.S. started
bombing Afghanistan to destroy this organization, its leader and its ally, the Taliban. The attacks
have almost eradicated al-Qaeda and effectively terminated the Taliban regime in Afghanistan.

For the world tourism industry, the effects have been severe for many countries.
Worldwide there have been 693 million international tourist arrivals in 2001 corresponding to a
decrease of - 0.6% or 4 million down from the 697 million of 2000 () The terrorist attacks of

27
Turkish President Ahmet Necdet Sezers Letter to U.S. President George W. Bush, Office of the President of the
Republic of Turkey, July 3, 2002.
28
Prime Minister Bulent Ecevits visit to the U.S. Embassy in Ankara, September 19, 2001,
www.basbakanlik.gov.tr.


22
September 11 severely aggravated the situation and as a result, for the first time since 1982 (the
times of the second oil crisis, martial law in Poland, the Falkland War and the conflict between
Israel and Lebanon) the worldwide number of international tourist arrivals showed a slight
decrease.
29


It has also had a negative impact on Turkish tourism. Until September 11 of that year, as
Table 7 illustrates, the Turkish tourism industry thrived in 2001.

Table 7

Number of Foreign Visitors Arriving in Turkey
in 2001
(monthly comparisons)

Months
Visitors
(thousands)
Change
(%)
January 359 7,7
February 404 14,2
March 547 25,7
April 871 20,8
May 1216 23,3
June 1,376 27,5
July 1,775 16,4
August 1,596 12,5
September 1,438 5,1
October 1,065 -9,6
November 521 -13,5
December 396 -6,3

Source: State Institute of Statistics and Turkish Ministry of Tourism

As it happened in the previous year, the upward trend of the Turkish tourism sector
continued in the first eight months of 2001. Despite a slight increase in September, the numbers

29
News from the World Tourism Organization, June 18, 2002, www.world-tourism.org


23
drastically fell in the following three months of 2001 and disrupted expectations. This naturally
was a depressing setback for the tourism industry. To a certain degree the decreases in arrivals
for October, November and December were seasonal, however, taking into consideration that
Turkeys climate is conducive to year-round travel, the main cause was fear of travel in the
immediate aftermath of September 11.

According to the Association of Turkish Travel Agents (TURSAB), during the period of
January-June 2002, the number of foreign visitors from the countries who traditionally spend
more than the average tourist has declined, despite an overall increase of 4.1% compared to the
same months of 2001. Tourists from the United States, France, Japan, Italy and Spain are
considered as groups who visit the cultural and historical sites of Anatolia as opposed to
Germans, British and Scandinavians who mostly prefer sun, sea and sand.
30
While the decrease
in the number of visitors from the U.S. and Japan have been deepening, declining number of
tourists from France, Italy and Spain especially hurt the tourism industry in Istanbul.
31


These horrific events and the fear of future terror attacks have slowed the tourism
industry worldwide. Some businesses associated with travel and tourism such as airline
companies, hotels, travel agencies, etc. either have gone out of business or have laid off scores of
employees. Ironically, the number of visitors traveled to Turkey has slightly grown in the first
six months of 2002.



30
Association of Turkish Travel Agencies, www.tursab.org.
31
Association of Turkish Travel Agencies.


24
Possible U.S. Attack on Iraq

The region, Figure 1, is a constant hotbed of problems that cause instability. U.S.
President George W. Bush referred to two neighbors of Turkey, Iran and Iraq, as members of an
axis of evil.
32
Also, Iraq, Iran and Syria are listed in a U.S. State Department report as
countries that are sponsoring terrorism.
33
For the past decade, U.S. and British warplanes have
used a Turkish military base at Incirlik, about 60 miles from Syrias border and 320 miles from
Iraqs, to patrol a no-fly zone over northern Iraq.





32
U.S. President George W. Bush, State of the Union Address, January 29, 2002, Washington, D.C.
33
U.S. State Department, Patterns of Global Terrorism 2001, May 21, 2002.
Figure 1


25
Today, the United States is in phase two of its war on terrorism. Its second target is
probably Iraq. The U.S. believes that Saddam Hussein is a threat to all Iraqis as well as to its
neighboring countries. The George W. Bush administration has warned that it would oust the
Baghdad regime by using any means necessary, including military. Various media sources have
claimed the U.S. will invade Iraq in the winter of 2003. While commenting on the U.S.-Russia
relationship, Jim Hoagland, a Washington Post writer, said European leaders support for arms
control treaty could come into play again in the diplomatic run-up to an American military
strike against Iraqi dictator Saddam Hussein next winter.
34
In addition, Helle Dale, a
commentator for the Washington Times, wrote that European opposition would unlikely delay a
military action against Iraq and sarcastically said that the weather would be most favorable
during the winter months.
35


As a traditionally close ally of the United States and a NATO member with a
predominantly Muslim population, Turkey is in a delicate position. While Turkey gives full
support to Americas war on terrorism, it has reservations and in fact opposes an attack on Iraq.
Turkeys deepest concern is that overthrowing President Saddam Hussein could result in the
disintegration of Iraq, which might further complicate the status quo in the region.
36
Turkey
fears that if attacked Iraq might fall apart and an independent Kurdish state might emerge in
Northern Iraq where Turkey shares a border. Also, hundreds of thousands of Kurds from
northern Iraq might flee to Turkey, as it happened during the Gulf War. The Gulf War set us
back for almost a decade, said retired Turkish General Cevik Bir. Now we are moving

34
Jim Hoagland, U.S., Russia and Global Entente, The Washington Post, July 25, 2002.
35
Helle Dale, Between Iraq and a hard place, The Washington Times, August 21, 2002.
36
Rita Cosby, Interview with Turkish Prime Minister Bulent Ecevit, Fox News, January 19, 2002.


26
forward, this would create new problems. We would become obsessed for years with all the
security problems it would create.
37


The Economist Intelligence Unit agreed and warned the possibility of a U.S. military
action against Iraq is a continuing source of worry for Turkish policymakers, although current
uncertainty regarding the timing and extent of such action has helped to ease Turkey's concerns.
Turkey needs to maintain its generally co-operative relationship with the U.S., but it is worried
that following U.S. military intervention Iraq could break up, and an independent Kurdish state
emerge in the northern part of the country.
38


Statements by U.S. officials such as President Bush has not yet decided what action will
be taken against Iraq at least temporarily relieved Turkey.
39
However, in a press conference he
held on July 8, President Bush was asked: Is it your firm intention to get rid of Saddam Hussein
in Iraq and how hard do you think it will be? And his answer was explicit enough: Its a
stated policy of this government to have a regime change. And there are different ways to do it
() The world will be safer and more peaceful if theres a regime change in that government.
40


Although Washington has neither established a direct link between al-Qaeda and Iraq,
nor has it proven that Iraq is developing weapons of mass destruction, the White House insists
that Saddam Hussein should be overthrown. In a forceful statement, Vice President Dick
Cheney said that the Iraqi leader had weapons of mass destruction and that he was seeking

37
Fareed Zakaria, The Fears of a Muslim Ally, Newsweek, January 28, 2002.
38
The Economst Intelligence Unit, Turkey Country Reports 1996-2002, www.eiu.com.
39
News item on Condoleezza Rice, National Security Adviser, Fox News, May 5, 2002.
40
Presidential News and Speeches, The White House, July 8, 2002.


27
nuclear weapons. Vice President Cheney said, the risk of inaction is far greater than the risk of
action.
41
His message was clear enough that a U.S. military attack against Iraq should be
expected soon.

What will happen after a possible U.S. military attack on Iraq is a question everyone is
asking about. What happens after Saddam Hussein is gone? The U.S. forces will eventually
return back home, but Turkey will continue to be Iraqs neighbor and will have to confront the
problems of a post-Saddam Hussein era. Turkeys opposition to a possible U.S. military action
against Iraq does not stem from its affection for Saddam Hussein. On the contrary, the Turks are
very much against his regime, and regard him as a menace. They know that as long as he is in
power there will not be peace and stability, and that the U.S. will continue to go after him.
However, the Turkish authorities think all other means should be tried, before resorting to the
most costly one: A military attack, which would cause many innocent lives to be lost, and which
might change the whole equilibrium in the region.

A U.S. intervention in Iraq would hit Turkey hard economically as it did during the Gulf
War. It might also take the focus of the country away from economic reforms. These reforms
might all take a back seat. Tuncay Ozilhan, Chairman of the Turkish Industrialists and
Businessmans Association said, In a time when Turkey needs to export more, an operation like
this would really unsettle Turkey economically.
42
Indeed, Turkeys fragile economy might
suffer even worse and could drive Turkey into facing a second economic crisis in almost two
years.

41
Office of the Vice President, The White House, August 26, 2002, www.whitehouse.gov.
42
Peter F. Sisler, Ecevit offers help, is wary of involving Iraq, The Washington Times, October 19, 2001.


28
The damaging effect of a war on the Turkish economy, especially the tourism industry,
is another cause of grave concern. Hence, Turkey will have to continue to walk a diplomatic
tightrope, avoiding direct collisions with U.S. policy without encouraging U.S. government
hawks, by making clear that it hopes military action can be avoided.
43
Prime Minister Ecevit
expressed his fears of lack of foreign direct investment in case of a possible attack. While the
Iraq issue hangs over us like some kind of nightmare, you cant expect much new investment to
come to Turkey, he said.
44


Professor Ihsan Dagi, a visiting Fulbright fellow at the Department of Government at
Georgetown University, also supports this argument: On the economic front, a war against Iraq
would cause Turks to continue to lose millions of dollars for an unforeseeable future, who have
already lost a considerable amount as a result of the sanctions imposed on trade with Iraq since
the Gulf War () It would certainly slow down the flow of foreign capital when it is most
needed to boost confidence in the economy and, no doubt, will hit tourism revenues, the last
stronghold of the Turkish economy.
45
Turkish Tourism Minister Mustafa Tasar has said that
only a possible U.S. attack on Iraq could hurt tourism revenues for next year. Apart from a
(U.S.) intervention in Iraq there are no winds that can affect us.
46


U.S. Deputy Defense Secretary Paul Wolfowitz, who visited Ankara in July, assured the
Turkish authorities that the U.S. was against disintegration of Iraq and said, A separate Kurdish

43
The Economist Intelligence Unit, Turkey, Country Reports, 1996-2002, www.eiu.com.
44
Prime Minister Bulent Ecevits Press Conference, Washington, D.C., January 17, 2002, www.basbakanlik.gov.tr.
45
Dr. Ihsan D. Dagi, Limits of Turkeys Strategic Partnership with the USA: Issues of Iraq, Democratization and
the EU, May 14, 2002. Article published by Turkish Industrialists and Businessmens Association.
46
Turkey Sees $10 billion Tourism Revenue in 2002, Reuters, February 27, 2002.


29
state in the North would be destabilizing to Turkey and would be unacceptable to the United
States.
47
Admitting Turkeys vital interests in Iraq, Mr. Wolfowitz eased the tensions among
the Turkish government officials by pledging them that Washington would financially offset
Ankaras any economic losses due to the war against Iraq.
48


A possible U.S. military attack against Iraq has apparently two negative dimensions for
Turkey: Political and economic. First, despite Washingtons assurances that integrity of Iraq
would be preserved, it is very difficult to know how events will unfold after the regime in
Baghdad collapses. If Iraq falls apart, Turkey might militarily involve to protect its borders and
its security. Secondly, invasion of Iraq will undoubtedly hurt the tourism sector in Turkey, and
thus its economy. Tourists and particularly visitors from the Western countries would be very
reluctant to travel to Turkey with the fear that their lives somewhat might be in danger.
Therefore, although it seems very likely to happen, a war against Iraq will not be welcome by
Turkey.

The IMF Support

President George W. Bush called Prime Minister Bulent Ecevit after the economic crisis
of February 2001 in Turkey and vowed support,
49
which in a sense meant IMF support. Since
Washington provides more than 17% of the IMFs funds, the U.S. does have influence when
deciding where the funds should be directed. A three-year Stand-By Arrangement, which was

47
Speeches by Deputy Secretary of Defense Paul Wolfowitz, Istanbul, Turkey, July 14, 2002, www.defenselink.mil.
48
Sedat Ergin, Hurriyet Newspaper, July 18, 2002.
49
Hurriyet Newspaper, February 24, 2001.


30
approved by the IMF Executive Board on February 2002, envisages a $17 billion (SDR 12.8
billion) aid package for Turkey. So far, Turkey has drawn almost $12 billion (SDR 9 billion).
The SDR (Special Drawing Rights) is a basket of currencies that consists of U.S. dollar,
British pound and Japanese yen.
50
Table 8 shows the expected payments in SDRs to the IMF
until 2006.

Table 8
Projected Payments to Fund
(SDR million, based on existing use of
resources and present holdings of SDRs)

Forthcoming
2002 2003 2004 2005 2006
Principal 1,223.90 6,122.50 6,031.30 1,132.70
Charges/Interest 337.80 660.80 530.20 199.70 12.80
Total 337.80 1,884.70 6,652.70 6,231.00 1,145.50

Source: The International Monetary Fund

However, in the absence of a major contribution from tourism receipt items, it could be
doubtful whether Turkey will be able to accomplish these payment terms. As stated earlier, the
tourism sector provides the government with the valuable and much-needed foreign exchange.
With the Turkish lira in such disarray, the tourism sector must stay vibrant for Turkey to grow
economically.

Table 9 shows the percentage decline in the number of tourist arrivals from three selected
countries to Turkey for events described earlier, as well as potential declines in the case of a U.S.
attack on Iraq. The possible declines are based on past data. These are best guess estimates that

50
The International Monetary Fund, www.imf.org.


31
have been calculated. As a result of these calculations, one can infer that the $2 billion drop in
revenues in 1999 will amount to a greater than or equal to drop if a war takes place.

Table 9

Potential Calculated Declines in Visitors
to Turkey in the Case of a U.S Attack
Decline in Tourist Arrivals from (%) on Iraq


Country
Gulf War
1990/1991
Earthquake
1999/2000
Potential Decline
2003 (and beyond)
Germany -19.9 -18.2 546,000
U.K. -4.3 -1.0 24,000
U.S. -61.5 -37.8 208,000

Source: OECD and calculations from past data

These numbers explicitly mean an early warning for the tourism sector in Turkey for the
year 2003, if the U.S. attacks Iraq in the first months of next year. Since the repercussions of a
possible military action might extend to more than one year, the sector could feel the hardships
beyond 2003.

Further, Table 10 provides a breakdown of GNP, Foreign Exchange Revenues, Exports
and Tourism Receipts. A closer look at the percentage section of the table provides insight into
the possible outcomes of a U.S. attack against Iraq. For example, from 1991 to 2001, the
percentage of tourism receipts compared to the GNP has risen 300%. This highlights the
assertion throughout this paper of the importance of the tourism sector in Turkey. However, a
close inspection of the table shows the precipitous declines in 1991 and 1999. These declines
are to be expected yet again if Turkeys neighbor Iraq is attacked. Second, the foreign exchange
reserve has doubled in this decade. The importance of foreign exchange to pay Turkeys debt


32
obligations was mentioned earlier. Tourism will be unable to contribute sufficiently to these
reserves if the region is marred by war.

Table 10
Share of Tourism Receipts in GNP, Foreign Exchange and Export Revenues

(billion $) (%)
(1)
GNP
(2)
Foreign
Exchange
Revenues
(3)
Exports
(4)
Tourism
Receipts
(4)/(1)


(4)/(2)

(4)/(3)

1991 150 29.4 13,6 2,7 1.8 9.2 19.8
1992 158 30,7 14,7 3,6 2.3 11.7 24.5
1993 179 32,9 15,3 4,0 2.2 12.2 26.1
1994 132 34,6 18,1 4,3 3.3 12.4 23.8
1995 170 44,7 21,6 5,0 2.9 11.2 23.1
1996 184 54,1 23,2 5,6 3.0 10.4 24.1
1997 192 61,7 26,3 7,0 3.6 11.3 26.6
1998 207 65,5 27,0 7,2 3.5 11.0 26.7
1999 185 55,7 26,6 5,2 2.8 9.3 19.5
2000 201 62,5 27,8 7,6 3.8 12.2 27.3
2001 148 59,4 31,2 8,1 5.5 13.6 26.0

Source: State Institute of Statistics and Central Bank of Turkey

A U.S. attack against Iraq would severely undermine the Turkish economy from a number
of aspects. With its negative impact on the balance of payments and the economy in general,
Turkey lost almost $40 billion in a decade after the Gulf War of 1991. A same result or even
worse seems possible under the present circumstances. One of the main pillars of the economy,
tourism can expect a sharp downward trend as an immediate impact in terms of numbers and
revenues in the tourism sector. In yearly terms, several billions of dollars of decrease in the
tourism revenues should be anticipated, as Turkey will be a front-line state.



33
Besides, unemployment will rise in the tourism sector as well as in other sectors throughout
the economy. Turkey already has a high unemployment rate of about 15%. Although limited due
to the U.N. sanctions against Iraq, some diminution of the trade activities with other regional
states could be expected in the case of a war. The cost of military preparedness and deployment
will increase budgetary expenditures, which might result in deviation from the IMF program
targets. Investment decisions will have to be delayed and crucial government projects will be
postponed or terminated for saving purposes.


















34
CONCLUSION

Turkey, a secular and democratic country, is passing through difficult times. Currently,
the country is suffering its worst economic crisis since the 1940s. The crisis began in February
2001. However, despite high inflation and other hardships, its economy has started showing
strong signs of recovery after an agreement last year with the International Monetary Fund. The
agreement will provide Turkey with a total of $17 billion in the next three years, of which more
than half has already been transferred. It should be noted that Washington had been the key
advocate of the IMF loans to help Turkey overcome its financial crisis.

Turkey is now among a group of countries that are accepted as the top tourism earners in
the world. In addition to its historical and cultural inheritance, favorable climatic conditions and
abundance of natural resources, the Turkish tourism sector also offers a qualified and reasonably
priced tourism product. With scores of tour guides and travel agents, tourism promotion is done
professionally. It attaches importance that its natural assets are conserved and a sustainable
growth is achieved. The sector tries hard and seeks new initiatives to ensure its continuity.
Indeed, to accomplish a sustainable growth, the tourism industry is changing its emphasis from
volume to a more selective department strategy targeted to improve the quality of a broader
portfolio of tourism experiences.
51
The investments and reforms made in the tourism industry
beginning in the 1980s, as well as the encouragement of the sector, helped Turkey to become a
major tourist destination and increase the number of foreign travelers visiting the country.


51
Yorghos Apostolopoulos, et al., Mediterranean Tourism: Facets of socioeconomic development and cultural
change (New York: Routledge, 2001), 107


35
The tourism industry is a one of the foremost components of the countrys economy. In
2001, it made up almost 5.5% of Turkeys GNP and 26% of its total export earnings. The
tourism sectors success also has played a crucial role with regard to Turkeys integration into
the world economy. With the knowledge of the tourism sectors huge contribution to its
economy, Turkey has been revising and improving its tourism policies with an aim to increase its
share in the international tourism market.

However, impact of some unexpected externalities has sometimes hindered its further
development. Turkeys geopolitical location has provided it many advantages, but also caused
numerous problems, such as living in a not-so-friendly neighborhood or standing on a major
fault line. As previously stressed, the tourism sector suffered an important slow down after the
Gulf War of 1991 and a serious setback with the earthquake of 1999. The effects of the terrorist
attacks of September 11 have been felt all over the world, including Turkey.

Now, another and growing sign of distress for the tourism industry in Turkey appears in
the horizon. The U.S. insists that Iraqi leader Saddam Hussein is developing weapons of mass
destruction and therefore should be deposed by using military force. A possible attacks outcome
and political ramifications for the world and Turkey are hard to predict. But its economic impact
on the tourism sector could be very severe, since wars are the biggest enemy of tourism and
travel industry. Its long-term effects could last for years.

Since a war against Iraq is getting closer and there is apparently no escape from it,
Turkey might start developing an interim tourism strategy that could be implemented at least


36
until the beginning of a new era in the region. The aim of this strategy more than anything
should include innovations to attract tourists to Turkey, despite an ongoing conflict in a country
bordering Turkey. Incentives could be offered to the international tour operators. Prices could be
reduced drastically. Advertisements could be placed on major media outlets. However, this is not
an easy undertaking. To modify a strategy, which has been painstakingly developed in the last
two decades could be frustrating and might not work. But thinking of alternatives could be better
than inaction.


















37
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39

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