ISTANBUL, Turkey – Turkey's stock market plunged more than 12 percent Monday as investors worried the country may have lost $15 billion in much-needed grant and loan aid from the United States because parliament refused to allow tens of thousands of U.S. troops on Turkish soil.
The dive came as the government showed no signs that it would ask legislators to reverse Saturday's surprise vote, which denied the United States a crucial northern front in a war against Iraq.
In Washington, White House spokesman Ari Fleischer said "no final judgments have been made" about the aid package. But State Department spokesman Richard Boucher said most of the package was predicated on compensating Turkey for the costs of facilitating the deployment of more than 60,000 troops.
"If those activities don't occur, the costs won't be incurred," Boucher said.
Prime Minister Abdullah Gul said his government was still analyzing the situation. "We will see what happens in the next few days," Gul told a news conference.
But even if the Turkish government does submit a new motion, analysts say, the process could take up to two weeks -- perhaps too long for Washington, which hopes to use Turkey to attack Iraq from the north.
The market fall is unlikely to have an immediate impact on the government as the Turkish lira held up well Monday, analysts said. But traders warned the market could continue to fall and may even plummet if it becomes clear that Turkey will not get the aid package.
If a motion is presented, many analysts believe the ruling party -- which is split over the issue amid strong public opposition to any U.S. deployment -- will wait for Sunday by-elections in the southeastern city of Siirt.
Recep Tayyip Erdogan, the popular leader of the governing Justice and Development Party, is running in those elections and he is widely expected to win. Once a legislator, he is expected to become prime minister and shuffle the Cabinet, replacing Gul in 10 or 15 days.
That could eliminate some ministers in the existing government who have spoken out against the deployment and are unlikely to sign the unanimous Cabinet decision needed to resend the motion to parliament, said political analyst Fehmi Koru.
But Erdogan is likely to want to avoid being seen as pushing through the unpopular U.S. deployment just days before the election, said Ilter Turan, political science professor at Istanbul's Bilgi University.
Fears the aid package could be lost sent Turkey's stock market tumbling 12.5 percent Monday, while the lira lost 3 percent to the dollar, trading at 1,643,000 at closing. The lira held firm after the Central Bank announced it would intervene to protect Turkey's currency if necessary.
There are also concerns that the failed vote could exasperate tensions with the United States, whose support for Turkey has been crucial with the International Monetary Fund and the European Union.
The upset was not as bad as many feared, in part because the government said its long-delayed 2003 budget was ready and included stringent austerity measures.
Economist Asaf Savas Akat underlined that Turks had not made a run for dollars, sparing the Turkish lira a sharp devaluation.
"This was the man in the street's way of supporting parliament's decision," said Akat.
But traders warned the fall in the markets was cushioned by the hope among participants that parliament would approve a resubmitted motion.
"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 market recuperate," said Tevfik Aksoy, economist at Global Securities.
It is not clear how long the United States is willing to wait before it abandons the northern front option. Washington says a northern front would lead to a shorter and less bloody war, but has said it can wage war even without Turkey's assistance.
If Turkey's government fails to reverse parliament's decision, Ankara would also lose a say in the future of neighboring Iraq. Turks fear the fall of Iraqi President Saddam Hussein will prompt Iraqi Kurds to create an independent Kurdish state. That in turn would boost aspirations of Turkey's autonomy-seeking Kurdish rebels.