The objectives of this paper are to:
      (1) Show that world business trends favor privatization which is difficult to achieve,
      (2) Show the major role that Turkey is playing in economic development and
            political stability in a potentially volatile Middle East, 
      (3) Document the success of the slow but steady privatization process
            currently underway in Turkey, 
      (4) Examine the apparent success of a creative form of business
           organization that is leading to greater privatization in the Aegean
           Region of Turkey, the Gucbirligi Multi-sector Holding Model.

FRAMEWORK OF THE PROPOSED PAPER

There are five sections in the proposed paper as follows: (1) An overview of International Privatization, (2) Turkey's Recent Political and Economic Past, (3) Current Privatization in Turkey, (4) The Gucbirligi Holding Model, (5) Summary and Conclusions 

AN OVERVIEW OF INTERNATIONAL PRIVATIZATION
      The recent state of international economic affairs has seen more than half of the world struggle in its transition from philosophies of absolutism and mercantilism to more free market approaches.  Adam Smith preached free-trade and laissez-faire economic policies as early as the mid 1700's.  Some nations followed his concepts while others were drawn to the teachings of Karl Marx and Friedrich Engles and scientific socialism.  By the mid 1970's, however, the literature seemed to focus more and more on problems appearing in those nations that had adopted various forms of socialism. 
      From the late 1970's through the mid 1990's, the privatization trend spread around the world in different forms and with different levels of intensity.    Some privatization probably did occur because national leaders were motivated by true ideology, like that found in the Czech Republic.  However, most changes occurred because of pragmatic reasons such as living conditions, oppressive tax rates, new freedom of the media, and a new need to be competitive among a growing number of free-market nations.  It is believed that politicians exercised their only option, "they supported privatization." 
      When individual countries and even regions are examined, it can be seen that moving to a free market system is not a simple undertaking.  It does not happen easily and it does not happen overnight.  Looking at both ends of a continuum, it can be seen that some (former) socialist nations, such as China, have elected to pursue a strategy of gradual change.  Russia and others have adopted an "earthquake" approach wherein democratic and free-market goals are attempted overnight. 
      The purpose of this paper is not to debate the best method of converting from socialism to capitalism.  This would be an overwhelming task because of the long list of nations involved, the many variables, and the degree of privatization that is being pursued.  It is more logical to look at specific countries and to get ideas from them about how privatization issues are being handled.  It might then be possible to discuss their strategies and select the better ones to pass along to other nations that are struggling to make a similar transition.  The current paper deals with Turkey, a major international ally of the West and a key strategic player in affairs of an unstable Middle East region. 

TURKEY'S RECENT POLITICAL AND ECONOMIC PAST
      The Turkish economy expanded rapidly between 1950 and 1960 as a partial result of the new economic thinking and needed large-scale foreign assistance from the West.  There were some economic and social strains because of the rapid economic growth and management style.  The proportional representation provisions of the 1961 constitution made it difficult for any party to gain the majority needed to enact effective legislation.   This often led to riots and civil disruption. 
      Following a dispute involving Cyprus in 1973, various groups within Turkey began to oppose the presence of NATO bases on their soil.  There was popular support to abandon secularism and draw closer to the neighboring Muslim Arab countries that were becoming more powerful because of their newfound oil wealth and the resulting political power.  The government (1979-1980) of Suleyman Demirel chose to retain Turkey's close alliance with the West and to seek foreign assistance in the hope of developing the private sector. 
      In 1989, Turgut Ozal was chosen as Turkey's first civilian head of state since 1960.  Ozal died in 1993 and Demirel replaced him as the country's president.  Economics Minister Tansu Ciller replaced Demirel as leader of the True Path Party and became the country's first female prime minister.  Turkey's economy suffered because of government deficits, a weak currency, and continued economic losses incurred by the UN trade embargo of Iraq.  A foreign exchange crisis came in late January of 1994 and subsequent crisis in the banking sector.  In April 1994, in an attempt to boost Turkey's faltering economy, Ciller announced an economic austerity package, including price and tax increases and privatization of state assets.  Signals of recovery were evident from early 1995 when GNP increased by 12.4 percent and 10.0 percent in the second and third quarters of 1995. 

CURRENT PRIVATIZATION IN TURKEY
      Based on conversations with older Turks, hardships were more pronounced before it became aligned with the West, in the early 1950's.  Since that time it has continued to develop and has emerged as a leader in the Middle East.  The private sector has emerged as a powerful growth engine.  Average annual growth rates over the past decade were the highest of any OECD country.  This has led to its designation by the U.S. Department of Commerce as one of the ten "Big Emerging Markets."  However, similar to almost all other emerging nations, Turkey does have economic problems of one kind or the other.  The fundamental one according to the Trade Promotion Coordinating Committee (TPCC) is Turkey's fiscal problem.  Basically this means excess government spending which results in inflation.  Furthermore, the solution to this problem lies in tough structural reform measures.  These include a focus on (1) continued privatization of money-losing state enterprises, (2) improved efficiency of tax collection, and (3) streamlining of the social security system. 
      The privatization effort in Turkey is continuing to slowly move along without serious problems, unlike those found in most former command economies.  The literature generally points to "mixed results" in describing Turkey's efforts to move toward a free market economic system.  Economic thinking in the business community has systematically shifted from one of state dependence toward a more modern free market system and is continuing to evolve.  Some remaining state managed businesses are slowly being privatized. But, it is still quite surprising to visitors from the West to find all types of businesses, from airlines and factories to supermarkets, that are still owned and operated by the government. 
      The chairman of the nation's privatization administration, said he found himself recently in a "very difficult situation in the middle of a global financial crisis and hectic domestic agenda."  The recent recessions in many Asian and European countries, along with the Russian financial crisis created hard times for Turkey.  Two major privatization efforts were recently canceled, he said.  One occurred because of a negative court decision and the other because of a scandal involving corruption.  According to some, the privatization notion is starting to lose credibility and being tainted in the eyes of the public.  Further problems are being created by the Turkish legal system which is not familiar with the "sophisticated aspects of free markets," according to the privatization chairman. 
      Current research by national and international authorities, however, concur in the finding that Turkey has been successful in its privatization efforts, but more remains to be done.  At a recent government conference, privatization was seen to be a top priority for Turkey's development. "The State should withdraw fully from trade and industry," said a top leader.  Another said "Turkey should privatize everything including the banks and pointed to the example of other countries where, after privatization "half the people are doing twice the production." 

THE GUCBIRLIGI HOLDING MODEL
      Multi-shared models or "holding companies" are becoming more common in Turkey and seem to hold a good deal of promise in future privatization efforts.  The private multi-shared organization is a form of business in which several smaller businesses join together to become a much larger and more competitive organization.  The basic purpose of this form of ownership is to reduce failure rates that are typically high among small businesses in free market nations.  This form of business organization can provide cost reductions (economies of scale,) and gain many technical advantages (experience curve economies) that do not accrue to smaller businesses.  Specifically, these experience curve advantages include, but are not limited to, expertise from the home office staff in such functions of purchasing, marketing, finance, accounting, human resources and even production. 
      Multi-shared organizations are not new to capitalism.  There have been other similar forms of combined effort in various countries in past years.  Most of them, however, are identified with big business or large corporations.  These include partnerships, joint ventures, or even giant conglomerates.  Large holding companies are fairly common in the UK, and cooperative trading groups are commonplace in Japan.  Another example, although it does not involve ownership, can be found in the United States.  This "joining forces to compete with big business" program is sponsored by the U.S. Small Business Administration (SBA) and brings various types of consultants to individual small businesses to help them compete.  The SBA also has some loan assistance programs.  The idea, of course, is that competition must be encouraged if capitalism is to survive.  The SBA program helps small businesses compete and it is hoped that they will grow into larger businesses. 
      The multi-shared organizations in Turkey are really working to accomplish very similar goals that other "join forces to compete" programs are doing in highly industrialized nations.  In Turkey they are bringing many small businesses together to help with expertise, and financing, so that they can compete with big public sector and private sector organizations that have greater economic power in a free market.  The Turkish people have always been great traders and they intuitively know that there must be real competition if their free market economy is going to succeed in the long run. 
      The Gucbirligi (pronounced Gook-brill-ee) Holding Model carries this form of organization to a higher level.  It has a tremendous record of success and other unique features that makes it worthy of additional research.  Gucbirligi (literally means "assembly of power" in the Turkish language) was established in November of 1995 with only $300 (U.S.) and now has become one of the leading firms in Turkey.  They now have capital assets that are worth more than one billion dollars (U.S.) and involve more than 3,700 small and medium- sized firms in 260 different areas.  The focus of efforts for Gucbirligi has been in the Aegean region which is the southwest costal section.  This region lagged behind Istanbul following WWII when several families controlled cement, textiles and tobacco production.  Recently, however, this area is becoming one of the more economically progressive regions in the nation. Part of the developments in the region are based on the efforts of Gucbirligi Holding. 
      The original 108 partners who formed the joint stock company were highly successful businesspeople and investors in the Aegean region and were "tired of seeing Izmir and the Aegean region receive less than its fair share of business activity in Turkey."  The central figure in the founding and current day-to-day operation of Gucbirligi is Mr. Kemal Zorlu, a wealthy and highly experienced Turkish industrial leader.  He has assembled a first rate cadre of professional managers, from several countries, to oversee the various product lines within the multi-sector organization.  Gucbirligi is now expanding rapidly into other regions of Turkey, including Istanbul, and has recently become a publically held company. 
      One unique feature of the Gucbirligi Model is the multi-sector approach.  There are other shared-ownership models in Turkey, but they are usually found within a single sector.  Other Aegean region multi-shared models are EGS (Aegean Clothing Industry) and KIPA, a supermarket chain.  Gucbirligi is the only example of a multi-sector model that is known.  It has diversified to a great extent, with industrial and consumer business interests that range from power generation and commercial construction to marketing pistachio nuts.  A highly visible construction project currently in the latter stages of development is the giant World Trade Center in Izmir.  This high rise tower project will house cinemas, hotels, offices and shopping malls. 
      
SUMMARY AND CONCLUSIONS
      The privatization effort in Turkey is continuing to move along slowly, without serious problems, unlike those found in many nations.  The literature generally points to "mixed results" in describing Turkey's efforts to move toward a free market economic system.  Current research by national and international authorities concur in the finding that Turkey has been successful, but more remains to be done.  It is still quite surprising to visitors from the West to find all types of businesses, from airlines and factories to supermarkets, that are still owned and operated by the government. 
      The Gucbirligi form of business organization, a multi-sector holding company, is creative and clearly fills a need in further moving the Aegean Region forward.  Its success is rather remarkable.  First-hand observation of the Gucbirligi operation by the researchers reveals a powerful and motivated ownership base.  The unusually gifted leader, Mr. Kemal Zorlu, has been able to attract a top flight professional management team, and this is most unusual in a developing region.  
      If the Gucbirligi model works so well in the Agean Region of Turkey, why shouldn't it be studied in greater detail and used in other nations that are struggling to compete in a global marketplace?  The fourteen nations that broke away from Russia, now considered to be the Former Soviet Union, and the Eastern and Central European nations could clearly make good use of this organizational business form.  The researchers have worked and traveled in these areas and have not observed such a high degree of dynamism in the business community.  Perhaps the ideas of "strength in numbers" or "assembly of power," in the context of small business, needs additional study.  It is difficult to argue with economic success and Turkey has achieved that.