Thank you very much. Thank you John. Thank you ladies and gentlemen. It’s a privilege to be in this seminar today. I think it could not be held at a more timely moment.

This is not the same talk I would have given three weeks ago. Of course, some elements would have been the same. Turkey's economic reform, then as now, has made important progress but still faces challenges ahead in 2002. I would have told you that the U.S. and Turkey are cooperating on a wide variety of regional and international security causes. I would have said that for the United States, Turkey's cooperation is central to our success in this area of the world. All this is still true. But after September 11, we have a new cause and a new plan of action that dominates much of our agenda.

It has now been fifteen days since the worst terrorist attack in world history. For Americans this has been a period of grief, of reconstruction, and of resolve. As President Bush has said, we'll meet violence with patient justice, assured of the rightness of our cause and confident of the victories to come. We may have our political differences and debates on many topics, but when we discuss our resolve to fight terrorism, those partisan concerns are unimportant. The United States is ready to take on this new and unasked-for war, with the full support of our citizens.

The cornerstone of our approach will be zero tolerance for terrorists and their allies. If a country has served as a haven or a supporter of terrorism, and if they refuse to take action against the groups in their midst and under their protection, that will be a defining point for our relationship with that nation. Such countries need to understand that they cannot separate their activities from the activity of these perpetrators. Nations throughout the world have a decision to make: either you are with us or you are with the terrorists. With Turkey, the answer is crystal clear – it is solidly with the international coalition. 

We are looking at measures to block the provision of haven, support, and funding. As Secretary of State Powell noted, from his perspective as a former soldier, "Diplomatic efforts, political efforts, legal, financial, other efforts, may be just as effective against this kind of an enemy as would military force." And the President has pledged to direct "every resource at our command, every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence, and every necessary weapon of war to the disruption and to the defeat of the global terror network."

It is natural, as President Bush said a few days ago during his public address to the American people, to wonder about our future. But despite the struggles and danger ahead, we believe that the civilized world will emerge stronger than before. As long as our coalition is determined and strong, he said, "this will not be an age of terror. This will be an age of liberty here and across the world."

Our embassy has been greatly touched by the outpouring of support and sympathy we have received from the people of Turkey. The morning after the attacks and thereafter, bouquets of flowers and written messages simply appeared at the gates of our embassy and consulates. Firefighter brigades from Istanbul and Ankara conducted memorial services for their fallen comrades in New York. We’ve been overwhelmed with personal notes of concern, from friends and colleagues and also from complete strangers, who were moved to express their outrage at the perpetrators and sympathy for the victims of these unspeakable attacks.

After the attack, the Government of Turkey immediately adopted a position -- to use the words of Prime Minister Bulent Ecevit – of “complete support.” On September 19 and 20, senior government and military leaders held an unprecedented "leaders summit.” The statement that emerged from that meeting is one of the strongest and most convincing messages issued by any of our closest allies. As Foreign Minister Cem said, “we are in the struggle of the U.S. against international terrorism and we are standing by the United States on the issue. We are at the forefront of the struggle."

I must tell you there is no secret that Turkey is essential to the success of this fight. Turkey is the only NATO ally with a predominantly Muslim population. It is a secular state and an effective partner in talking sense to the parties to the Middle East conflict, one of the few interlocutors trusted by all parties. It is our strongest military ally in the region, with influence in the Caucasus, Central Asia and South Asia, including with Pakistan.

The Turkish government’s posture is informed by fifty years of security cooperation with the United States. When the international community has asked for help, from Korea to Kosovo, Turkey has been at its side, just as we have often been at Turkey's side when it needed us. And Turkey learned earlier than most about the threat that international terrorism poses to peace, to commerce and to development. Turkey has much to gain from eradicating terrorism from the region. That said, Turkey’s leaders’ pledge of support is an act of courage and vision. The risks to Turkey's sensitive social and political fabric are real.

The enemy, ladies and gentlemen, is not Islam. We have to make this point again and again, since it serves the purpose of our real enemies to spread fear and mistrust among people of different faiths. The United States was founded, first and foremost, by those who sought to practice their religion without fear. Religious freedom and tolerance are fundamental to our national identity. I deeply regret that there have been acts of bigotry against Muslims in America, and join with my nation's leaders in condemning such acts. Our fight is with those who perpetrate terrorist violence – sometimes in the name of religion, sometimes in the name of ethnic nationalism, and sometimes just to protect their own criminal networks.

We are mindful too of the concerns, expressed by PM Ecevit in a letter to President Bush, about the fate of Afghan civilians. Last year the United States spent over $170 million alone on food, shelter and medicine for Afghans within their country and for those in refugee camps in neighboring countries. We continue to make a distinction between those who advocate violence and shelter criminals and terrorists, and those who are themselves the victims of terrorist regimes.

This is the world's fight. More than 60 nations, some say more than 80 nations, lost citizens in the attacks in the United States. This is civilization's fight. This is the fight of all who believe in progress and pluralism, tolerance and freedom. Perhaps the NATO charter reflects best the attitude of the world: an attack on one is an attack on all. It’s not simply a fight against something , it is a fight for something. It is a fight for the values of democracy and human rights that we all hold.

Our coordination with Turkey, our close NATO ally, is exactly where it needs to be. We have held discussions at senior levels, including a consultation between President Bush and President Sezer, and Foreign Minister Cem will be in Washington tomorrow. Just as valuable as the practical assistance which Turkey may provide is its wise counsel about Afghanistan, the coalition in general, and the sensitivities of moderate Muslim nations. Turkey's advice regarding the Afghan Northern Alliance has been conveyed to the highest levels in the U.S. government, and we are paying careful attention.

Since I arrived a year ago, hardly a week has passed that some respected pundit or some political mandarin hasn’t predicted the imminent demise of the 57th government of Turkey and early elections. Hopefully you will forgive me if I fail to join this chorus. The current government is now the longest-serving Turkish government in over a decade, and the longest-serving coalition government in Turkey's history.

The government is now poised to enact a package of 37 constitutional amendments that will bring Turkey’s constitution more in line with those of EU countries. This is the most extensive constitutional reform process since the enactment of this constitution in 1982. It is widely supported by political parties, employers, unions, and civil society organizations. Business, in particular, views this package as a symbol of the government's commitment to transparency and reform. Indeed, one proposed change to the constitution would ensure that international treaties would trump domestic law – thereby improving the business climate by giving international investors an extra measure of security. The parliament has staked out an ambitious plan to pass this reform package. The amendments will broaden fundamental rights and freedoms for Turkish citizens. If fully implemented, these changes will move Turkey towards full candidacy with the European Union and eventual EU membership. This package represents a remarkable achievement on behalf of a government that so many commentators described as finished.

Turkey's economy will be affected, along with the rest of the world, by the events of September 11. It is still too early to judge the impact of September 11 on Turkey's finances. But we did know that before these attacks Turkey faced a very large debt burden in the months ahead and servicing that debt will require the vast majority of its budget. In 2001, 81% of all Turkish government revenue went to debt service; that percentage may continue into 2002, regardless of the impact of September 11. All other Turkish government expenditures must come either from the remaining 19% of revenue or from new loans, which would simply increase the GOT's debt burden in the future.

Looking beyond the immediate challenge of its debt dynamics, Turkey's economic reform program has achieved remarkable successes. The IMF and World Bank, among others, have recognized the bold series of steps taken by the government.

Allow me to note three of the reform achievements by Turkey of this government:

First, the Government has adopted a competitive and flexible exchange rate, which is helping Turkish businesses to export. This commitment to a float bodes well over the medium to longer term in the prospects for Turkey's export-led growth. Exports are beginning to pick up in the seven months since the move to a float, which is a shorter time than the lag seen in some East Asian countries following their adoptions of floating exchange rates.

The second achievement has been the strong fiscal and public debt management policies over the past year. This year the Government is cutting expenditures 6 to 8 percent in real terms, while maintaining revenue and thus keeping to even exceeding a very ambitious primary surplus target of 5.5 percent of GNP. It has also paid for prior years' extravagant subsidies by issuing new debt to the state banks, and has passed laws to ensure that such subsidies will not be available in the future. This sustained financial discipline – a balanced budget approach – is a key to success.

Which brings me to the third achievement - a more healthy banking sector. Under new bank regulators, Turkey has taken decisive actions to address problems in the four state banks which have dominated the banking industry in the past. It closed one of them, is in the process of privatizing a second, and is downsizing the other two while preparing them for eventual privatization. It has also taken decisive action to eliminate abuses among the private banks. The end result for the banking sector is consolidation, infusions of foreign equity, and more prudent lending practices.

Ladies and gentlemen, Turkey under this reform program is a model for other struggling emerging markets, proof that others can follow this model and prosper in the globalized economy of the 21st century. Turkey is proof that a Muslim country, with the full range of traditional cultural values, has a place at the table of the most developed and democratic states. I have no doubt that if Turkey continues down the road it has chosen, and continues to implement the economic reform and constitutional amendments it has adopted, then Turkey will become a full EU member. This is what the U.S. government supports, and what our other European allies want as well. This Administration is engaged at the highest levels, and Turkey knows it has full U.S. government support as it continues to take the difficult reform steps it has chosen.

In conclusion, let me say that is our belief that the Republic of Turkey, led by this government, will continue to work through its economic and political challenges and achieve its potential as a full partner to the United States and to the west. Knowing that Turkey will be at our side and on our side in the struggle to come brings us confidence that we will win this fight.

Thank you very much.