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Turkey may withdraw $15 bln bond reserves from France

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  • Turkey may withdraw $15 bln bond reserves from France

    Xinhua General News Service, China
    December 27, 2011 Tuesday 1:16 AM EST


    Turkey may withdraw 15 bln USD bond reserves from France for Armenian
    "genocide" bill: report

    ANKARA Dec. 27


    Turkey's Central Bank might transfer its 28.8 billion Turkish Liras
    (15.3 billion U.S. dollars) of investments in French bonds to other
    European countries as part of sanctions against France for the
    Armenian "genocide" bill, local media quoted economists as saying on
    Tuesday.

    "Judging from the recent steps taken by the Turkish government and the
    political tone, I can expect the Turkish Central Bank could withdraw
    its reserves from France as part of its economic sanctions in the
    future," Turkish newspaper Hurriyet Daily News quoted Erol
    Katircioglu, professor of the economics department of Istanbul Bilgi
    University, as saying.

    Further, Kerem Alkin of Istanbul Commerce University said it is the
    right of Turkey to withdraw its reserves from France and the move will
    prove Turkey is playing sanctions for real, according to the Hurriyet
    report.

    With a government bond of 28.8 billion Turkish Liras (15.3 billion
    dollars), Turkey's Central Bank reserves in France are second only to
    the United States' 48.6 billion Turkish Liras (25.7 billion dollars),
    according to the report.

    By the end of 2010, Turkish Central Bank's total investments in
    various banks registered 110.1 billion liras (58.4 billion dollars) .
    In European countries, the bank had 17.7 billion liras (9.4 billion
    dollars) reserves in Germany, 4.8 billion Liras (2.5 billion dollars)
    in Belgium, 4.5 billion liras (2.4 billion dollars) in the Netherlands
    and 1.3 billion Liras (689 million dollars) in the United Kingdom.

    In 2010, Turkey invested around 17.7 billion liras (9.4 billion
    dollars) to purchase the French government bonds amid the euro zone
    crisis. "The French economy might face serious difficulties if the
    Turkish Central Bank withdraws reserves," said Mehmet Usta, deputy
    chairman at Bank Aktif, who also served as general manager at Banque
    de Bosphore in France between 1994 and 2007.

    France's need for liquidity is rising due to the ongoing European debt
    crisis. Turkey's investment in the country would still play an
    important role if France could not compensate the amount from any
    other source immediately, said Mehmet Usta.

    "German bonds would be the primary choice of Turkey's Central Bank
    instead of French bonds," Mehmet Usta said.

    However, such a move might bring negative effect to Turkey's EU
    membership bid, said Erol Katircioglu.

    On Thursday, Turkey halts "all political consultations, joint military
    activities and maneuvers" in response to the French approval of a
    bill, which stipulates criminal sentences and fines for those who
    refuse to recognize the killing of Armenians in 1915 as "genocide" in
    France.

    Turkey and Armenia have been bogged down in a dispute over the World
    War I-era deaths of Armenians under the Ottoman rule. Armenia says the
    deaths occurred in a "genocide," while Turkey denies the charge and
    insists that the Armenians were victims of widespread chaos and
    governmental breakdown as the Ottoman Empire collapsed before modern
    Turkey was created.

    Turkey rejects the term "genocide" for killings of Armenians in the
    World War I era, arguing the issue should be left to historians.
    Ankara has proposed to establish a joint commission by Turkish,
    Armenian and other international historians to discuss incidents in
    1915. Armenia has not responded positively to the offer.

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