The Financial Times
Oct 13 2006

Turkey tries to prevent boycott of French goods
By Vincent Boland in Ankara and Martin Arnold in Paris

Published: October 13 2006 20:15 | Last updated: October 13 2006
20:15

Turkish leaders tried on Friday to head off a consumer boycott of
French goods and a mood of growing hostility towards France following
a parliamentary vote on Armenian claims of Ottoman-era genocide.

Recep Tayyip Erdogan, Turkey’s prime minister, has been blamed for
stoking the threat of a boycott this week when he said French support
for the claim `would change everything for France’. Calls for a
boycott were made by some opposition figures and chambers of
commerce, and a consumer lobby said the action would continue until
France changed its stance.

Mr Erdogan acknowledged, however, that a boycott could be as damaging
to Turkey’s economic interests as to those of French companies.
`Let’s be calm,’ he said in a speech while opening a terminal at
Ankara airport. `What would a boycott change? We should take steps by
knowing what the realities are.’

Turkey’s trade with France was about $10bn a year, which, he said,
was 1.5 per cent of France’s total foreign trade volume. Turkey’s
gross domestic product stands at about $350bn.

French companies are significant investors in Turkey and might be hit
by a boycott, although the large numbers of Turks they employ might
temper any such action. Carrefour, the supermarkets group, owns a
chain of stores, and Renault is a key investor in the booming
automotive sector.

Jean Saint-Geours, director of Peugeot, said sanctions were a `risk’
for the carmaker, which has 5-6 per cent of the Turkish market.

Previous consumer boycotts – notably of Italian goods during a
diplomatic row between Ankara and Rome over fugitive Kurdish
terrorists – had little impact.

A more serious worry for French companies might be in the sphere of
foreign direct investment, analysts said. Turkey is preparing to
privatise its energy distribution companies and to invest significant
sums in nuclear power and in its defence infrastructure – areas where
French companies are strong internationally.

Mahmut Kaya, head of research at Garanti Securities in Istanbul,
said: `It is highly likely that French companies will be banned from
state tenders and auctions.’

Tusiad, the influential Turkish big-business lobby group, said the
proper response to the French move should place renewed emphasis on
domestic reforms, `especially freedom of expression’. This is a
reference to Turkey’s unwillingness to address concerns in the
European Union that its penal code suppresses free speech, following
prosecutions of novelists and journalists in recent months, often for
addressing the sensitive Armenian question.

The Freedom for History Association, including some of France’s most
respected historians, called the bill a `genuine provocation’. The
ministry for relations with parliament said the bill was `not a
priority for the Senate’s agenda’, suggesting it might never get the
necessary reading in the upper house of parliament to make it into
law. But François Hollande, leader of the opposition Socialists,
promised to pass the bill if the left wins next year’s elections.

Armenians say up to 1.5m of their ancestors were massacred by Ottoman
troops in 1915 in the 20th century’s first act of genocide. Turkey
rejects the characterisation of the events as genocide. It says
hundreds of thousands of Armenian Christians and Turkish Muslims died
in a civil war. The French bill would make it a crime to deny that
the massacres were genocide.