CORRECTED COPY -- WORLD BANK HELPS ADDRESS DEEP

UNCLAS SECTION 01 OF 02 ANKARA 006636

SIPDIS

TREASURY FOR PLANTIER

SENSITIVE

E.O. 12958: N/A
TAGS: EAID ELAB SOCI TU
SUBJECT: CORRECTED COPY -- WORLD BANK HELPS ADDRESS DEEP
SOCIAL NEEDS



1. (SBU) Summary: Within its total $6 billion portfolio,
the World Bank is currently allocating $1.7 billion to
social sector projects that assist workers laid off by
privatization, strengthen health care delivery through
transitioning to universal health insurance, and improve
school curricula and conditions. While the privatization-
and health-related projects have been quite successful, the
Bank may be forced to withdraw $150 million in education-
related loans due to lack of cooperation from the Ministry
of National Education. Rather than alienating Turkish
bureaucrats with a laundry list of legal "conditions" for
Bank lending, the Bank's local leadership has found its
quiet, behind-the-scenes approach quite successful in
advancing positive change. End summary.

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Smoothing Transitions for Laid-Off Workers
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2. (SBU) The World Bank has made a priority of trying to
ease the social strains of privatization, which has been
hotly opposed by labor unions and many parts of society.
Building on its 2000-2005 Privatization Social Support
Project, the World Bank and Turkish Treasury signed a $465
million follow-up program on October 25. Both projects are
designed to assist employees of state-owned enterprises who
lose jobs because of privatizations. John Innes, who
coordinates social sector projects at the Bank's Ankara
office, said the Bank hopes to mitigate negative perceptions
of privatization by helping laid-off employees transition to
other employment. The Second Privatization Social Support
Project takes a three-pronged approach - job loss
compensation, labor redeployment services, and management,
monitoring, and evaluation. In coordination with Iskur, the
Turkish Employment Agency, the project provides job
counseling, placement services, labor retraining, and
temporary employment.


3. (U) In addition, the Bank is partially funding six micro-
business incubators in six cities throughout Turkey. These
incubators, in conjunction with local chambers of commerce,
provide part of the start-up capital for new businesses to
employees who have been laid off because of privatization.
The financing is repaid over three years, after which the
businesses are expected to be self-sufficient. Innes said
the first such incubator is already self-sufficient from
reflows of microcredits.

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Broadening Access to Medical Care
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4. (SBU) Turkey ranks far behind most middle-income and EU
accession countries on key health indicators. World Bank
data suggests that 36 to 37 percent of the Turkish
population does not have health insurance. Government
health care spending mainly benefits higher-income groups,
and the poor face numerous barriers to access. The World
Bank cites four key reforms which would improve the overall
health care system in Turkey: the expansion of health
insurance to cover all citizens, strengthening primary
health care services, ensuring that poorer areas have access
to professional medical care, and boosting the quality of
maternal and child health care services.


5. (SBU) With these reforms as the goal, the World Bank
launched its Health Transition project in 2004. With a $60
million budget, the project assists Turkey's preparation for
universal health insurance, helps develop national health
care standards, and strengthens the Ministry of Health into
an effective policy-making entity. Innes noted that the
country's best-run hospitals used to be under the Social
Security Institution (SSK) but have now been brought under
the Ministry of Health, with a resulting loss of financial
control, particularly for medicines. For example, SSK
hospitals used to require patients go to special pharmacies
which restricted spending on drugs. The Ministry of Health
reimburses for any purchases, including for overpriced
generic drugs. As a result, the GoT is footing a much
larger pharmaceutical bill, leading to health spending
overruns in 2005. (Currently the GoT is spending 0.35% of
GDP on medications.) According to Innes, the GoT is
investigating measures to bring these costs under control.
Foreign research-based pharmaceutical companies are worried,
however, that these cost-saving measures will restrict
access to their "innovative" products in favor of local
generics.

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Upgrading and Expanding Access to Basic Education
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6. (U) According to World Bank reports, in 2000, the
average adult literacy rate was 86.5%; however, the literacy
rate for adult women was only 76.5%. That same year, only
85% of primary school-aged females were enrolled in school.
The World Bank reports the leading problems in public
schools are lack of books and supplies, poor teaching, and
substandard school conditions. Under the $300 million Basic
Education Project, the Bank seeks to remedy these problems
by funding the refurbishment of 500 schools, the provision
of educational materials for 4000 schools, additional
training for teachers and inspectors, construction and
furnishing of 300 new preschool classrooms, and
rehabilitation of 60 schools for children with special
needs. In its $104 million Secondary Education Project,
approved in February 2005 and scheduled to be signed in
early 2006, the World Bank plans to support Turkey's reform
of the secondary school curriculum. The end goal of the
project is to ensure that all students graduate with the
same basic skills, regardless of whether they attend general
or vocational high school.


7. (SBU) Innes said that working with the Ministry of
National Education has been particularly difficult. The
Ministry employs seven Deputy Under Secretaries and 28
Director Generals, resulting in a massive, unwieldy
bureaucracy. While Innes noted that the World Bank has good
policy dialogue at the university level, he said that the
lack of cooperation at the elementary and secondary levels
may force the Bank to pull back $150 million of its $300
million commitment.

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Comment
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8. (SBU) Meeting the needs of a young (60% under the age of
30),poor (27% living in poverty) and fast growing (2.4
children per woman) population is Turkey's principal
economic and political challenge as it integrates into the
European and global economy. With Turkey its second-largest
borrower worldwide, the Bank is a key agent of change,
particularly in breaking down the ossified system of state
companies and heavily centralized educational and health
systems that do not offer flexibility and choice for meeting
modern needs. Despite its large portfolio, the Bank's moral
and persuasive influence is far more important than the
dollar amount of the financing it provides. The Bank's
local leadership therefore believes that it can be most
successful working quietly behind the scenes to change
attitudes rather than by putting heavy-handed legal
"conditions" on Bank lending that would tend to cause
Turkish bureaucrats and politicians to balk and walk away.
But when it needs to get tough, such as with the education
projects, the Bank has shown that it is able to do so.

McEldowney