U.S. Offers to Aid Turkey's Economy in Case of Iraq War

U.S. officials said Saturday they made progress on a possible aid package to help protect Turkey's struggling economy from any damage caused by a possible war in neighboring Iraq.

"We've established an agreement on the overall structure of the assistance," John Taylor, the Treasury Department's undersecretary for international affairs, told reporters at the end of two days of talks in the Turkish capital Ankara.

Taylor did not elaborate on the scope of aid. Turkish news reports have said Turkey wants up to $28 billion.

"The overall magnitude is not the thing that we focused on. We focused on trying to make it as useful for Turkey in the event of a conflict," Taylor said.

Turkey was a staging point for air raids during the 1991 Gulf War and its support is crucial to any U.S. military operation against Iraq. But Turkey prefers a peaceful solution to the situation, fearing a new war could devastate its economy or destabilize the region.

Turkish newspapers say Washington is looking to use Turkish bases, ports and railroads and possibly deploy tens of thousands of troops to Turkey. The U.S. and Turkish governments have not confirmed any of the reports.

Turkey says it has lost up to $40 billion in trade with Iraq over the past decade.

Turkey's National Security Council met Friday to discuss its possible role in a war. But the leaders did not say if they would help Washington, such as allowing it to use its airspace or military bases in a war.

Taylor was accompanied by U.S. Undersecretary of State Marc Grossman. The two met with members of Turkey's economy ministry and Turkish Foreign Secretary Undersecretary Ugur Ziyal on Saturday.

Ziyal "conveyed to us the sense of the National Security Council and we conveyed to him our report of where we stand," Grossman said. "We're very satisfied with the consultations and the cooperation that we have from our Turkish ally."

Though Turkey's leaders have long expressed opposition to an attack, Turkey is likely to have little choice but to extend support to the United States if Washington resorts to war.

Washington's support was key to helping Turkey to receive about $16 billion in loans last year, amid a recession that saw Turkey's economy shrink 9.4 percent. Taylor said Turkey was making progress in implementing belt-tightening measures and its economy was recovering from the crisis.

"We've seen a real improvement," Taylor said.

Turkey especially fears that a war to depose Iraqi leader Saddam Hussein could open the way to independent Kurdish state in northern Iraq. That, Turkish leaders fear, could encourage Kurdish rebels who waged a 15-year war in southeastern Turkey.