IZMIT, Turkey When observers began assessing the damage caused by the earthquake that struck Turkey's prosperous industrial northwest on August 17, 1999 and killed more than 17,000 people, they looked to the sky before the balance sheets.
Acrid black smoke from a blaze that broke out at the Izmit facility of the country's largest oil refinery Tupras formed a thick blanket over the town in the days after the quake.
The plant, which provided 36 percent of Turkey's petroleum products, threatened nearby towns with destruction or an environmental catastrophe for the four days it took firefighters backed by planes from Turkey and abroad to extinguish the fires ringing dozens of fuel tanks.
Total wealth lost to quake damage, the World Bank estimated in its initial impact assessment, could total $6.5 billion or 3.3 percent of GNP, with resettlement and other secondary costs projected to be $3.6-$4.6 billion by the end of 2000.
Early evidence suggested lost production and corporate tax revenues from the region, which made up as much as half of Turkey's industrial output, could cripple an economy that was suffering its worst recession since 1994 at the time.
A "Boring Recovery" Instead, analysts say, Turkey has witnessed a surprisingly rapid recovery. Industrial output, which shrank 5.2 percent in 1999, was up 3.4 percent year-on-year in the first half of 2000.
Manufacturing output rose 3.3 percent in the same period as the automotive, chemical and other facilities based in the region escaped the extensive damage the Tupras refinery suffered.
"It's been something of a boring recovery, in my opinion," said Sheetal Radia, an economist with S&P MMS.
"There's still something of an erratic element (in industrial output) in mining and refineries, but there's obviously been a resurgence in manufacturing." Tupras, which estimated its losses from the earthquake at $75-80 million, expects to return to full production capacity at the Izmit plant in September.
That is something of an achievement after seven tanks, including those containing crude and naphtha, were destroyed by the blaze, which also brought about a declaration of force major on Tupras sale and purchase agreements immediately after the fire.
"You can say that they've shrugged it off," said Adrian Rouse, an analyst with Istanbul-based Bender Securities.
The remediation work has involved 145 repair and rebuilding tenders and still goes on.
Turkey successfully privatized 31.5 percent of the company for $1.235 billion in April.
Tupras's return to full capacity is expected to restore balance to a sector that analysts say does not reflect the full extent of the recovery from effects of the quake.
"It's an index of how seriously the industrial production figures are influenced by the refiners," said Kasper Bartholdy, chief economist for emerging markets and Eastern Europe with CSFB.
Despite the earthquake, Tupras generated Turkey's highest company sales revenue in 1999: $7.6 billion.
"Their production was down on the order of 17 percent year-on-year.
If you subtract that, rather than output growth of 2-3 percent, we'd be seeing it in the range of 10 percent." Recovery Giant, Limping Davids That growth, however, may not reflect the scale of the expenses Turkey will incur in settling the 400,000-600,000 people displaced by the tremor, some observers suggest. Nor will it employ those whose livelihoods were disrupted.
The earthquake measured 7.4 on the Richter scale and devastated housing stock.
While major industrial plants rode out the shock with minor damage, thousands of less well-built apartment blocks simply collapsed, killing and trapping thousands.
Small and medium industries, which the World Bank estimated employed between a quarter and half of the population in the regions hit by the quake, suffered inordinately and have the weakest prospects for recovery.
Industries employing fewer than 150 people made up more than two thirds of the firms reporting significant property damage in a survey by a regional industry group, with average losses of $637,500.
Less than half of those firms were insured or have realistic prospects for reconstruction, according to the survey.
"There is little to say about many of the small commercial enterprises," said Hamdi Dogan, secretary general of the Kocaeli Chamber of Industries.
"They have no strength to recover." (Reuter)