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### Viewing cable 05ANKARA4742, SCENESETTER FOR THE SEPT. 2-3 VISIT OF SENATOR TED

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05ANKARA4742 | 2005-08-12 10:02 | 2011-08-24 01:00 | UNCLASSIFIED | Embassy Ankara

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 05 ANKARA 004742

    SIPDIS

    STATE FOR EUR/SE AND H

    E.O. 12958: N/A
    TAGS: PREL PGOV OREP TU
    SUBJECT: SCENESETTER FOR THE SEPT. 2-3 VISIT OF SENATOR TED
    STEVENS TO TURKEY

    REF: STATE

    SENSITIVE BUT UNCLASSIFIED

    ¶1. (SBU) SUMMARY: Your visit comes at a time when our
    bilateral relations are on the mend from a difficult period
    when events in Iraq and Turkey's focus on getting a date from
    the EU to start accession negotiations overshadowed our
    traditionally close cooperation.  With a growing economy, a
    scheduled Oct. 3 date to start EU negotiations, and following
    a series of high-level government exchanges culminating with
    the early June visits of PM Erdogan, FM Gul and DCHOD Basbug
    to Washington, Turkey has expressed its commitment to
    strengthen our partnership in areas where our interests
    converge, particularly in the Global War on Terrorism.
    However, the lack of coalition effort against the PKK
    (Kurdistan Workers' Party) in Iraq remains a sore point.  A
    recent upswing in terrorist attacks in Turkey attributed to
    the PKK and lack of momentum on Turkey's EU agenda have
    revealed divisions between the ruling, Islam-oriented AKP
    government and secular state institutions, and indecision
    that suggest a policy inertia which could impede the
    government's ability to move forward to further Turkey's EU
    bid and its broader policy programs.  END SUMMARY.

    Political Divisions
    -------------------

    ¶2. (SBU) By the numbers Turkey should be facing smooth
    sailing politically.  Ruling Islam-oriented AK Party (AKP)
    has an almost two-thirds majority in parliament and controls
    almost all major and second-tier Turkish cities.  There is no
    viable political alternative at the moment or in the
    foreseeable future.  The AKP government has passed long
    overdue political and human rights reforms -- at least on
    paper -- and has led Turkey close to an Oct. 3 start date for
    EU accession negotiations.  Sharply lower inflation and high
    economic growth have allowed the government to argue for
    continued patience on the economic front.

    ¶3. (SBU) However, a broad cross-section of Turks is worried
    that Turkey is headed for a significant political day of
    reckoning, even a constitutional crisis, between the core
    institutions of the state, which have a secular vision of
    Turkey, and AKP, which step by step is putting into effect
    policies reflecting an Islamist-oriented concept of Turkey
    and its foreign policy.  Core state institutions (Presidency,
    high judiciary, armed forces, and bureaucracy) are deeply
    concerned by what they see as AKP's failure to put into
    effect comprehensive and workable policies to combat both PKK
    and Islamist terrorism.  They are equally concerned by what
    they see as AKP's broad attempts to subvert the secular
    nature of public institutions by trying to pack the
    Constitutional Court and other high courts, by preparing to
    pass constitutional amendments which would sharply cut back
    secular controls, by cutting off opposition parties' right of
    debate (akin to the filibuster) to ram controversial
    legislation through parliament, by appointing Islamists to
    key bureaucratic posts, and by cutting off effective
    bureaucratic control of Koran courses (thus leaving Turkey
    vulnerable to medrese-type courses run by fanatics).

    ¶4. (SBU) In addition, both the U.S. and EU are concerned by
    an anti-missionary, anti-Christian, anti-Jewish atmosphere
    fostered by AKP and its policies regarding minority religions
    in Turkey and by AKP's weak stance toward al Qaida, Zarkawi,
    and other Islamist terrorists.

    Security Relations on the Upswing
    ---------------------------------

    ¶5. (SBU)  Defense relations have traditionally been the
    strongest aspect of our bilateral relationship, although they
    have always had their ups and downs.  One of the troughs was
    in March 2003 when the Turkish Parliament voted against
    allowing U.S. troops to enter northern Iraq from Turkey and
    the following July when US forces arrested Turkish soldiers
    in northern Iraq for plotting against a local mayor.  The
    successful June 2004 NATO Summit in Istanbul and President
    Bush's visit to Ankara put the relationship back on a more
    positive footing.  However, the relationship suffered again
    in late 2004 and early 2005 due to the continued unpopularity
    of the coalition effort in Iraq (over 95% of the population
    opposed the war) and lack of Turkish leadership in defending
    our relationship.  Military-to-military relations are on the
    mend despite the Turkish military's continued frustration at
    our lack of kinetic action against the PKK terrorist
    organization's camps and leaders in northern Iraq.  It was
    the Deputy Chief of the General Staff (DCHOD), General Ilker
    Basbug, who turned this situation around by expounding on the
    importance of Turkey's relations with the U.S. despite some
    problems, at a nationally-televised press conference on
    January 26.  The Chief of the General Staff (CHOD) followed
    suit in April at a speech to the Turkish War Academy, in
    which he reaffirmed that the Turkish-American relationship
    was mutually beneficial and too broad in scope and too strong
    to be weakened by any short-term event.

    Partner in GWOT
    ---------------

    ¶6. (U) Turkey has provided valuable assistance and
    cooperation to the global war on terrorism (GWOT).  Ankara
    offered to send peacekeeping troops to Iraq in October 2003
    (an offer Iraq declined), approved the use of Incirlik Air
    Base for tankers to refuel aircraft on support missions for
    both OEF and OIF, authorized the transit of US troops on
    rotation from Iraq, and permits the transit of fuel,
    coalition supplies and humanitarian goods (from OIF's
    inception until the end of CY04, over USD 2.5 billion in
    coalition sustainment and humanitarian assistance, or about
    25% of all sustainment and 66% of humanitarian fuel shipments
    to Iraq.)  In April 2005, the GOT granted the US permission
    to establish a cargo hub at Incirlik.  Operations begin in
    June which have significantly increased the efficiency of the
    delivery of supplies to Iraq.  By moving cargo operations
    closer to Afghanistan and Iraq, 6 US military C-17 aircraft
    are able to move the amount of cargo it would take 9-10
    military aircraft to move from Germany.  Turkey has also
    permitted the basing of a US FAA plane at Incirlik to conduct
    navigational aid checks at all Iraq air fields.  Turkey fully
    and publicly supported the participation of all Iraqis in the
    Jan. 30 elections and remains active in reconstruction
    efforts, including providing fuel and electricity for Iraq,
    and training in Turkey for Iraqi diplomats and politicians,
    and (through the NATO training mission) Iraqi Security
    Forces.

    ¶7. (U) On Aug. 8, Turkey completed its second International
    Security Assistance Force (ISAF) Command (II and VII) in
    Afghanistan, which it held for six months and during which
    time it contributed over 1,600 troops.  Turkey is currently
    looking at options to further contribute to ISAF.  Turkey
    also contributes to reconstruction and training efforts in
    Afghanistan.  It is involved in the reconstruction of schools
    and is exploring possible counter-narcotics training programs
    for Afghan police both in Turkey and Afghanistan, as well as
    alternative livelihood options for poppy farmers.  Following
    PM Erdogan's May visit to Afghanistan, he pledged an
    additional $100M in assistance to the country.

    ¶8. (U)  Beyond Afghanistan and Iraq, the US and Turkey
    coordinate military assistance to Georgia and Azerbaijan,
    improving their abilities to protect important energy
    transport routes.  Turkey subscribes to every arms control
    arrangement it is eligible to join, including the
    Proliferation Security Initiative (PSI).  It will host the
    first PSI combined air, land, and sea exercise in May 2006.
    Ankara has also been supportive of international efforts to
    press Iran to meet its commitments to the IAEA, fully backing
    the EU-3 dialogue.  The one issue on which we disagree is
    Syria, where Turkey believes engagement will be more
    effective than isolation to halt Syria's support of terrorism.

    ¶9. (U) The Turkish military's Partnership for Peace Training
    (PFP) Center provides counter-terrorism and other training to
    personnel from PfP partner countries.  In June, TGS
    inaugurated a NATO Center of Excellence for the Defense
    Against Terrorism that will provide more specialized training
    opportunities for both NATO partner nations, Allies and,
    under NATO's Iraq training mission, Iraqis as well.  The US
    is supporting this center through the provision of rotational
    trainers and via George C. Marshall European Center for
    Security Studies trainer-training programs.

    Defense Industry Cooperation Weak
    ---------------------------------

    ¶10. (SBU) While overall mil-mil relations are improving, our
    defense industry relationship is declining.  Turkey has
    historically preferred US military equipment for NATO and US
    inter-operability reasons and in April 2005 signed a $1
    billion Foreign Military Sale agreement to upgrade Turkey's
    F-16 fleet; Lockheed Martin will perform the work on behalf
    of the USG.  However, no US firm has won a significant
    commercially competed defense contract since Boeing was
    awarded a contract in 2002 for Air Early Warning and Control
    (AEW&C) aircraft.  In 2004, three tenders (UAVs, Main Battle
    Tanks, ATAK -- attack helicopter) were canceled.  Bell
    Helicopter, which had won the original ATAK tender in 1997,
    lost it when the Turkey canceled the tender due to Bell's
    inability to commit to significant technology transfer.  The
    tender was reissued in Feb. 2005 under onerous Terms and
    Conditions requiring significant technology transfer and
    heavy liability clauses.  Bell Helicopter withdrew from
    competition and Boeing threatened the same.  In an attempt to
    ensure US participation, Turkey revised the tender to reduce
    some liability requirements and reissued it on May 18.
    Boeing is evaluating the changes but remains unconvinced that
    the terms have been revised enough to allow its
    participation.  We understand that the tender is being
    revised yet again to address some specification issued raised
    by non-US contenders in hopes of keeping them in the
    competition.  Bids are due Sept. 13.

    ¶11. (SBU) One bright spot is the June 26 agreement -- after
    three years of negotiation -- between Turkey and Sikorsky
    Helicopter for a $390M sale of 12 Seahawk helicopters, with
    an option to buy 5 more.  However, the sale is contingent on
    the extension of an existing EXIM facility that had been
    extended previously and will run out in 2011.  Sikorsky has
    told us it is considering bidding on a tender recently issued
    for 52 helicopters for the Turkish Forestry Service and
    Turkish Armed Forces.  If EXIM is unable to extend its
    facility for the Seahawk deal, Sikorsky's broader business
    interests could be negatively impacted.

    ¶12. (U) Turkey is a Level III participant in the Joint Strike
    Fighter (F-35) program and has pledged to buy around 100
    planes, potentially making it the second or third largest
    purchaser after the US military.  However, it has requested
    significant ($6B) local procurement which will be difficult
    to meet.

    Stagnation on Cyprus
    --------------------

    ¶13. (SBU) Overall settlement efforts are at a standstill
    following the 2004 referendum in which Greek Cypriots
    rejected the Annan Plan (Turkish Cypriots approved it).
    Cypriot President Papadapoulos has refused SYG Annan,s
    request that the Greek Cypriots side state its objections to
    the Plan with "clarity and finality" as a first step in
    further settlement efforts.  Papadopolous feels no pressure
    to show flexibility given that the Republic of Cyprus was
    taken into the EU in May 2004.

    ¶14. (SBU) Papadopoulos has also stymied EU attempts to ease
    Turkish Cypriot isolation through aid and direct trade.  The
    U.S. has done more than any other country to ease Turkish
    Cypriot isolation, including establishing a $30.5 million
    "Cyprus Partnership for Economic Growth" (CyPEG) designed to
    help develop Turkish Cypriots businesses; several delegations
    of Congressmen and staffers have also visited northern Cyprus
    directly rather than traveling through the south.  Turks
    appreciate these efforts.

    Bumpy Road to the EU
    --------------------

    ¶15. (U) Turkey and the EU are set to open accession
    negotiations October 3.  Turkey,s July extension of its EU
    Customs Union to the ten new EU members, including Cyprus,
    was marred in the view of some EU member states by Turkey's
    declaration that it will not recognize the Republic of Cyprus
    absent a comprehensive settlement.  French PM de Villepin,s
    and President Chirac's subsequent statements that Turkey
    should also formally recognize Cyprus added an element of
    doubt.  The EU will take this up this matter just before your
    visit, at a September 1-2 foreign ministers, meeting.

    ¶16. (SBU) EU members are working to agree on a negotiating
    framework for Turkey prior to October 3.  The UK, as EU Term
    President, is working behind the scenes to prevent members
    from inserting language that could cause the Turks to balk at
    opening talks including, for example, suggestions that Turkey
    will have to settle for less than full membership, i.e., a
    privileged partnership.

    Economy on the Rise
    -------------------

    ¶17. The Turkish economy is recovering from the sharp
    financial crisis of 2001 thanks to the implementation of some
    structural reforms -- such as the creation of an independent
    central bank, cutbacks in government spending, and bank
    regulatory reform -- as well as strong inflows of emerging
    market portfolio investment.  GDP grew 8.9% in 2004 and is
    expected to grow at about 5% this year, while inflation is
    currently below 10% and declining.  The depth of Turkey's
    financial problems and the partial implementation of reforms
    leave the country vulnerable to a change in global market
    sentiment that could be triggered either by domestic
    developments or a rise in U.S. and global interest rates.  A
    large current account deficit (over %5 of GDP) is financed
    largely by short-term inflows.  Foreign direct investment has
    not materialized as a stable source of financing or growth,
    primarily due to the generally opaque legal and regulatory
    environment.

    ¶18. The benefits of growth are not being felt by average
    Turks.  Annual per capita income is currently about $4000.
    The current official rate of unemployment is approximately
    10% (there is widespread underemployment) and
    deep poverty is widespread, particularly in urban sprawl and
    rural areas.  Given the young population (30% is below the
    age of 15), generating sustained growth is critical for
    Turkey to raise incomes and maintain political and economic
    stability.  Unfortunately, the structural reforms necessary
    to sustain such rates of growth have been slow in coming.
    The privatization program has been disappointing, and the
    share of unregistered (and untaxed) activity in total GDP is
    estimated at 40-60%.  Some of these issues are being
    addressed through active IMF and World Bank programs.  The
    IMF recently approved a new three-year, $10 billion program
    after prolonged government foot-dragging and the World Bank's
    loan portfolio totals $4.3 billion.  The EU accession process
    will also entail reforms, but the most difficult ones will be
    back-loaded and will entail large costs, such as for upgrades
    needed to meet EU environmental standards.

    ¶19. In large part because of the slowness of reforms and
    liberalization and the unwelcoming legal environment,
    economic relations with the United States are not
    commensurate with Turkey's economic size or potential.
    Understandably, Turkey has given a priority to developing
    economic relations with EU countries.  However, the U.S.
    share of Turkey's imports declined from 7.6% in 1999 to 3.5%
    ($3.4 billion) in 2004.  The largest U.S. export category is
    $500 million in raw cotton that is transformed into textiles
    for export to Europe and the U.S.  Other leading U.S. exports
    are machinery, chemicals, and scrap metals.  Total U.S.
    investment is paltry: approximately $2 billion, concentrated
    in the food products, banking and automotive sectors.  The
    highest profile U.S. companies are
    Coca Cola, Citibank, Pepsi, Cargill and Ford; the latter has
    a successful joint venture with a leading Turkish firm
    producing light trucks for domestic use and export to Europe.
      A track record of high-profile disputes involving arbitrary
    Turkish court rulings and Turkish defaults on contracts  has
    deterred greater investment.  Approximately $1 billion in
    Turkish imports entered the United States under the
    Generalized System of Preferences (GSP) program in 2004.

    ¶20. We also have serious issues over market access for U.S.
    agricultural products, including rice and breeding cattle, as
    well as a potentially restrictive biotechnology law being
    considered by the Turkish parliament.  Turkey plays a key
    role in ensuring global energy security.  The 1.0
    million-barrels-per-day Baku-Tblisi-Ceyhan pipeline should be
    completed later this year, and approximately 3 million
    barrels flow through the congested and environmentally
    sensitive Turkish Straits every day.  Turkey imports nearly
    all of its domestic energy supplies, including large
    quantities of natural gas from Russia and Iran.  It recently
    announced plans to develop nuclear generating capacity, but
    it is not clear how this would be financed.
    MCELDOWNEY

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