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R 111243Z MAY 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 5498
INFO RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
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RUEHYE/AMEMBASSY YEREVAN 1224

UNCLAS SECTION 01 OF 03 ANKARA 002644 
 
SIPDIS 
 
USDOE FOR CHARLES WASHINGTON 
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EINV BEXP TU ZK
SUBJECT:  TURKEY: SPECIAL BUSINESS REP MERMOUD DISCUSSES 
CENTRAL ASIA 
 
 
Sensitive But Unclassified.  Please handle accordingly. 
 
This cable was coordinated with ConGen Istanbul. 
 
¶1.  (SBU) SUMMARY: Following closely on the heels of the 
Secretary's visit to Turkey, which broached an enhanced 
 
SIPDIS 
bilateral strategic vision and dialogue on economic - as 
well as political and security issues, EB/CBA Special 
Representative Frank Mermoud conducted a series of meetings 
in Istanbul and Ankara May 3-4, focusing on potential for 
U.S.-Turkey cooperation in third countries including Central 
Asia and the Caucasus.  Mermoud found strong interest from 
both Turkish government and business officials on developing 
ways to expand commercial engagement and cooperation in 
Central Asia and elsewhere.  Also, Mermoud discussed 
opportunities to expand U.S.-Turkey trade and investment 
with Privatization Administration, Foreign Trade 
Undersecretariat, energy officials, and businesspeople, 
including pharmaceutical reps.  End Summary. 
 
---------------------- 
Bridge to Central Asia 
---------------------- 
 
¶2.  (SBU) Meeting with the Istanbul-based Turkish-Azeri 
Business Council, Mermoud and Chairman Cengiz Gul agreed 
that a brainstorming session between the council and other 
Turkish-U.S. economic organizations to explore areas for 
cooperation would be a useful way forward in expanding U.S.- 
Turkey commercial cooperation in third countries.  Gul said 
Turkey is the largest foreign investor in Azerbaijan and its 
companies had won several billion dollars in construction 
contracts there.  Mermoud said the U.S. hopes to see 
Turkey's economic influence in the region expand as regional 
economic anchor. 
 
¶3.  (SBU) In Ankara, Representatives of TOBB (the leading 
Turkish business federation) agreed with Mermoud that Turkey 
was uniquely positioned as a catalyst for regional 
integration and cooperation, both with respect to Central 
Asia and also with respect to its EU accession process.  The 
TOBB officials said they would be sending a large Turkish 
business delegation to Baku at the end of 2006 or in early 
¶2007.  They said that TOBB had helped create a business 
chamber network in Central Asia and Turkey.  The TOBB reps 
cited the revitalization of the historical Silk Road for 
modern transportation and trade as a key initiative on which 
they are cooperating with the U.S. Chamber of Commerce. 
Foreign Trade Undersecretariat (FTU) officials also 
expressed strong support for cooperation in third countries 
like Central Asia.  TOBB also cited other initiatives such 
as modernization and expansion of Turkey's border crossings 
with Georgia, Iraq, and other neighbors and working with the 
GOT to revitalize the economic dimension of the Black Sea 
Economic Cooperation (BSEC) organization. 
 
------------- 
Energy Bridge 
------------- 
 
¶4.  (SBU) At a separate lunch devoted to energy issues, 
Mermoud and other invitees agreed that Turkey was positioned 
to build on first oil from BTC to establish other regional 
energy links from Central Asia and Iraq to Europe.  A state 
pipeline company BOTAS official emphasized that Turkmen or 
Kazakh gas volumes must be secured to provision a serious 
bridge to Europe (and as an alternative to Iran).  He said 
that Turkey had incremental capacity of over 15 BCM pa 
available in its trunk line, but to feed a potential Nabucco 
pipeline to central Europe there would have to be a new 
 
ANKARA 00002644  002 OF 003 
 
 
dedicated pipeline through Turkey.  A state oil company TPIC 
official said that the U.S. should advance and lead oil and 
gas business opportunities in Iraq, taking advantage of 
Turkish companies' contacts, experience, and equipment in 
Iraq. 
 
-------------------- 
Year of the Americas 
-------------------- 
 
¶5.  (SBU) Foreign Trade Under-Secretariat (FTU) DG for 
Agreements Sevket Ilgac described the GOT's plans this year 
for the "Year of the Americas" campaign, aimed at increasing 
growth in trade with the U.S. and complementing the efforts 
of TOBB and the American Turkish Council (ATC).  FTU has 
targeted the six states of New York, Georgia, Florida, 
Illinois, California, and Texas.  The FTU officials said 
that they were also ready to assist U.S. companies in 
Turkey, noting also that Turkey could serve as a platform 
for the U.S. for third countries; in addition to Central 
Asia, he mentioned Libya, Algeria, and the Caucasus.  The 
trade officials also expressed a desire to improve 
commercial relations with U.S. pharmaceutical companies and 
assure restarting of fuel product shipments from Turkey to 
SOMO (State Oil Company) in Iraq (in fact, restarted on May 
7) 
 
¶6.  (SBU) Mermoud held separate meetings with pharmaceutical 
reps in Istanbul and the Privatization Authority (PA) in 
Ankara.  Representatives of two leading U.S. research-based 
pharmaceutical companies offered a downbeat assessment of 
recent developments, noting that their problems extend 
beyond Turkey's inadequate implementation of data 
exclusivity to pricing and registration difficulties.  They 
concurred with Mermoud's suggestion that a letter from the 
U.S. Trade Representative or Secretary of Commerce to Prime 
Minister Erdogan on the issue would be a useful step 
forward, as without attention at the "highest level" of the 
Turkish government, nothing can be accomplished.  While FTU 
officials could not dispute pharmaceutical problems, they 
were hopeful that they could be resolved. 
 
--------------------- 
Privatizations Galore 
--------------------- 
 
¶7.  (SBU) Coming off a banner year in 2005 (Turk Telekom, 
Erdemir/Steel, and TUPRAS/refinery), Privatization 
Administration (PA) President Metin Kilci described targets 
for the coming year: sugar companies, port facilities- 
particularly Istanbul's Galataport, the state petrochemical 
company (PETKIM), the cigarette state firm (Tekel), a bank, 
and the electricity distribution (TEDAS).  In response to 
Mermoud's questions related to the interest of U.S. firm AES 
in electricity distribution, Kilci said that he expected 
imminent passage of required legal amendments, finalization 
of tariff structure, one-on-one meetings with investors, and 
possible addition of a provision for international 
arbitration ("after exhausting domestic legal recourse"). 
The PA President said he hoped to achieve transfer of 1-3 
regional networks by the end of 2006.  Kilci said the PA was 
waiting for a Capital Market Board ruling to pursue an IPO 
for over 25% of Turkish Airlines, aimed at reducing the 
GOT's share to less than 50%.  Longer-term, Kilci said that 
state pipeline company BOTAS and state electricity 
transmission company TEIAS were under study.   Finally, 
Kilci noted that the high state court stay on the refiner 
TUPRAS privatization would be overcome. 
 
¶8.  (U) This cable was cleared by Special Representative 
 
ANKARA 00002644  003 OF 003 
 
 
Frank Mermoud. 
 
Wilson