U.S. warns Turkey about $2.3 billion in healthcare debt

The United States said Turkey owes $2.3 billion to international healthcare companies and should repay the debt to prevent an exit of U.S. pharmaceutical firms.

Turkish President Recep Tayyip Erdoğan and his son-in-law, Treasury and Finance Minister Berat Albayrak, promised to repay the arrears promptly a year ago, when they had stood at $230 million, but the commitment was not fulfilled, U.S. Ambassador to Turkey David Satterfield said on Wednesday, according to Reuters.

Turkey is now asking companies to accept significant reductions in the amount owed but there will be consequences for non-payment or such reductions, Satterfield told a trade conference streamed online, Reuters reported.

“Companies will consider departing the Turkish market or will reduce exposure to Turkish market. This is not a direction which serves the interests of Turkey,” he said.

The Turkish government is seeking a free trade agreement with the United States to help diversify its exports and increase bilateral trade to $100 billion from $21 billion last year. But relations between the two countries have soured in recent years after Ankara bought S-400 air defence missiles from Russia and refused to release a U.S. pastor accused of terrorism in 2018.

Turkey’s budget deficit has widened significantly over the past two years, as a currency crisis in 2018 was followed by the outbreak of the coronavirus in March this year, prompting the government to increase spending sharply to boost economic growth. The Turkish lira is trading at record lows against the dollar, further pressuring government finances. Turkey in the past has sought to renegotiate the price of medicines to reduce health spending, saying costs are unjust.

U.S. media firms may also end up leaving the Turkish market after Erdoğan’s governing Justice and Development Party (AKP) passed a law through parliament making them more accountable to its concerns over content, said Satterfield.

“A policy that mandates large social media firms to store consumer data only in Turkey can create an inherently uneven playing field,” he said.

https://www.reuters.com/article/usa-turkey-trade/us-ambassador-says-turkey-ignores-pharma-debt-at-its-peril-idUSL5N2GK4TX