WHEN THE EARTHQUAKE STRIKES, WILL ISTANBUL BE

UNCLAS SECTION 01 OF 02 ISTANBUL 001098 SIPDIS TREASURY - PLEASE PASS TO CPLANTIER E.O. 12958: N/A TAGS: ECON SUBJECT: WHEN THE EARTHQUAKE STRIKES, WILL ISTANBUL BE READY? ¶1. (U) Summary: Istanbul lies near a fault-line and on the seismic path of past earthquakes. The question is not if one will strike, but when. Earthquake preparedness is thus a key issue for private and public sectors alike. Discussions with scientific and business groups show that Istanbul,s private sector is unevenly prepared. The insurance and banking sectors are in good standing, but industry-based operations require more preparation. End Summary. ¶2. (U) Experts estimate that a major earthquake on the fault line south of the Princess Islands (only a few dozen kilometers from Istanbul),or in a basin west of Istanbul (within 100 kilometers of the city),is likely in the next generation. In either case, Istanbul will be hard hit. As time goes on, however, the urgency behind preparedness measures following the last major earthquake ) Kocaeli in 1999 with 17,000 fatalities ) is dwindling. Whereas in its aftermath firms drafted business-continuity plans and simulated crisis responses, today the frequency of these efforts and exercises has diminished. -------------- Securing the Refrigerator -------------- ¶3. (U) Private individuals are aware of the risk and are taking steps in their homes towards mediating a potential earthquake, with some spill-over effects on business preparations. Marla Petal, Director of Disaster Preparedness Education Program at Bogazici University, described how she trains the trainers to prepare individual communities and businesses for an earthquake. Preparedness includes developing an action plan, checking the earthquake-resilience of a building, performing structural retrofitting if necessary, and carrying out non-structural measures (e.g. securing appliances). Through such work, Istanbul,s public has gained a high degree of earthquake awareness. As Istanbul residents realize it is something they must contend with, they bring this knowledge and training to the work place. -------------- Securing the Tax Office -------------- ¶4. (U) Prof. Gulay Barbarosoglu, Director of Kandilli Observatory and Earthquake Research Institute at Bogazici University (the former Imperial Observatory and the premier earthquake research center in Istanbul),expressed far more optimism for public sector readiness than for the private sector. Following the Kocaeli earthquake, the World Bank provided Turkey with a package of reconstruction soft loans. The last $400 million of this package is being used for what is dubbed the Izmir Project, a large-scale initiative designed to ready priority public-sector buildings, such as hospitals, schools, and cultural-heritage sites. The actual work has not yet begun, but after years of wrangling to get the purview of World Bank earthquake reconstruction funding extended from already impacted areas to potentially impacted areas, the bidding for projects will soon begin. ¶5. (U) Concurrently, the Ministries in charge of health and education have initiated national earthquake-preparedness plans that encompass Istanbul. Furthermore, the Governor of Istanbul, leading the charge for public-sector readiness efforts within the city, recently created a Project Implementation unit with a new director and staff entirely devoted to this objective. The combination of the Izmir Project with Ministerial and Gubernatorial efforts will go a long way towards making public structures earthquake ready. -------------- Securing the Conveyor Belt -------------- ¶6. (U) The Chamber of Industry (ISO),is best positioned to assess the state of earthquake readiness of Istanbul,s industrial base, since by law all industrial enterprises belong to it. Following the last earthquake centered in Kocaeli, ISO carried out training and awareness programs for its members. Large industrial facilities, many of which suffered first-hand, have taken precautionary measures. These include business continuity plans, back-up systems, strong-motion sensors, and employee location and replacement. ¶7. (U) Nurdan Sirman, head of the Special Secretariat for Environmental Activities at the Chamber of Industry, explained how the Chamber in November 2000 published a survey of members entitled &Research on Preparation of Industry for Earthquakes and Risks Afterwards.8 The survey examines how businesses responded following the 1999 earthquake to improve their preparation for a disaster, and what measures they see as priorities. Of the industrial firms surveyed, 18% said they had suffered damage. More than a year after the earthquake, 36% said they still had no disaster preparedness plan, a figure which has undoubtedly fallen further since then. In terms of readiness, 59% bought earthquake insurance, 59% improved the quantity and quality of emergency response equipment, 44% rearranged the layout of their operations for improved security, and 30% executed drills. Looking forward, 80% cited training as their top priority, closely followed by 71% who desired greater cooperation between emergency response teams and the private sector, and 70% that wanted more information. ¶8. (U) Significantly, the document has not been updated in the last 6 years. This validates observers, fear that the impetus for preparedness that propelled initial changes since the last earthquake is fading. Over time, interest, enthusiasm, and the frequency of training exercises have all diminished, detracting from industry readiness. ¶9. (U) Some businesses, however, are successfully developing business continuity plans, securing mission-critical records, devising a disaster scenario, and mapping out the impact of an earthquake on suppliers and customers. They are predicting the market changes that would be precipitated, examining how to deal with delays in inputs and payments, and considering how to finance recovery. Two firms that are leaders in their sectors provide good illustrations. Koc Holding's Migros, one of the largest retail supermarket chains in Turkey, established in 2001 an emergency management system entirely at their expense. Migros uses it to carry out drills in cooperation with local municipalities and first-responders at different Migros locations. Aksa, Turkey's biggest acrylic and textile chemical-producing company, was hard hit in 1999. It has since created a disaster response unit with staff whose sole responsibility is to devise scenarios, inspect for preparedness, and carry out regular drills. The shared characteristic of these better-prepared businesses is that they assign a budget and staff to undertake this work, and chart its progress through explicit milestones. Both serve as models to other firms in their respective fields. ¶10. (U) This is especially true of the services sector. The leading services firms ) including major commercial banks and insurance firms ) have been relatively more successful in preparing for the inevitable earthquake. For example, insurance firms have adapted to a potential flood of claims by changing the 'catastrophe' services they provide. Part of the reason for their progress may be that the nature of their work requires less tangible changes to their operations, while the losses from ceasing operations would be devastating. As a consequence, these firms are on average better prepared than goods-producing industries. Upper management has taken ownership of earthquake readiness, and integrated this work into their operations. -------------- Comment on Commercial Readiness -------------- ¶11. (U) Looking at the Istanbul cityscape, one would be hard pressed to find a single institution that has not allocated some resources to earthquake preparedness. However, this does not mean that there has been a uniform response. Part of the issue may be the diverging resources and needs of private-sector firms. Services firms only require non-structural measures and a degree of employee awareness. Industrial firms have tangible infrastructure to ready and protect, a much messier task. Different firms are progressing at different speeds, and it seems safe to predict that many will be caught short. JONES