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

UNCLAS SECTION 01 OF 07 ANKARA 002910 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV OREP PINS ECON MARR TU
SUBJECT: TURKEY SCENESETTER FOR MAY-JUNE CODELS 
 
 
¶1. Summary:  The Erdogan government's drift on relations with 
the U.S., with the EU, and on reform is of concern, as are 
trends inimical to religious freedom.  U.S. Turkish relations 
remain solid in specific areas and we look for new 
opportunities to expand cooperation, but our relations are 
not a strategic partnership at this stage.  End summary. 
 
¶2. The single-party government of Prime Minister Tayyip 
Erdogan maintains an almost two-thirds majority and his AK 
Party (AKP) faces no viable political alternative at this 
stage.  Erdogan insists that his government is democratic; 
has no hidden Islamist agenda; and has maintained its 
EU-oriented and economic reform pace.  Erdogan and Foreign 
Minister Gul assert that they have expressed sufficient 
support for bilateral relations with the U.S.; that Turkey's 
Iraq policy has proven right (as opposed to what they see as 
U.S. mistakes); that Turkey shows religious tolerance and is 
the victim of "Islamophobia" in the West; and that the ball 
is now in the EU's, Cyprus's, and Armenia's court given what 
Erdogan and Gul claim are sufficient Turkish gestures on 
EU-related reform, Cyprus, and Armenia. 
 
¶3. However, the scissors have widened between what Erdogan 
and his government assert and what a wide spectrum of 
observers see as a lack of political leadership or 
transparent and consistent decision-making from the Erdogan 
government; a serious, continuing drift -- in places 
regression -- on reform; serious problems with religious 
freedom, including more open anti-Christian, anti-Jewish, and 
anti-Alevi (heterodox Muslim) sentiment; and the government's 
failure to tackle poverty or corruption, including within its 
own ranks.  They see as well a lack of communication or 
understanding between the Turkish government and the Turkish 
State (Presidency, armed forces, Judiciary, national 
intelligence organization, bureaucracy), with worrisome 
implications for governance. 
 
¶4. Moreover, although the Turkish General Staff has made 
clear, strong declarations underscoring the centrality of 
bilateral relations with U.S., Erdogan and Gul have lagged, 
making largely perfunctory statements on the importance of 
strong relations with the U.S.  Erdogan has been more willing 
to speak sharply against the EU, at one point recently even 
charging that some EU countries aim to split Turkey.  On 
Syria, while the Turkish military and some other State 
institutions express concern, both the Erdogan government and 
President Sezer continue to insist on Turkey's right to 
develop relations with Assad, whom they tout as a reformer. 
On Iran, the Turkish State (especially the military and MFA) 
have spoken of the danger of Iran's pursuit of nukes; 
however, the Erdogan government has sent mixed signals.  Some 
of Erdogan's advisors also appear to advocate using Russia as 
an alternative to NATO or the EU. 
 
¶5. In this environment, the U.S. approach has been to 
emphasize areas where our cooperation has remained solid -- 
Afghanistan, the Balkans, Cyprus, the Baku-Tbilisi-Ceyhan oil 
pipeline, Turkey's EU candidacy, and the war against 
terrorism -- and to look for distinct projects (e.g., the 
Broader Middle East and North Africa Initiative) where we can 
cooperate, rather than continue to speak of a strategic 
partnership.  We are also ultra-careful to avoid calling 
Turkey a "moderate Islamic country" or a "model" for anyone 
else; both phrases enrage the secularists, who think the U.S. 
is trying to create a more religiously-oriented Turkey, and 
the more Islam-oriented segments, who see Turkey as a system 
which has repressed natural expressions of religion and 
faith. 
 
Cyprus 
------ 
 
¶6. Turkey made an historic effort to reach a comprehensive 
Cyprus settlement last year, which failed when the Greek 
Cypriots voted down a referendum on the Annan Plan in April 
¶2004.  Since then, the Turks have been frustrated that the 
international community, particularly the EU, has not moved 
to end the isolation of the Turkish Cypriots who, unlike the 
Greek Cypriots, approved the Annan Plan referendum.  The 
Turks are pressing for direct trade and direct flights with 
north Cyprus. 
 
¶7. The U.S. has done more than any other country to reach out 
to Turkish Cypriots.  Under our $30.5 million Cyprus 
Partnership for Economic Growth (CyPEG) we have helped train 
Turkish Cypriot businesses and bankers, and created 
opportunities for them to expand their markets and clients. 
In February, the Embassy Ankara Commercial Counselor 
accompanied a delegation of representatives of U.S. companies 
on a visit to north Cyprus, flying directly there from 
Turkey.  We have increased visa validity for Turkish 
Cypriots.  We have increased scholarships for Turkish Cypriot 
students.  Our Ambassador has regular contact with 
"President" Talat.  On May 30, the U.S. Congressional Turkey 
Study Group will fly directly to north Cyprus from Turkey for 
meetings with Talat and others. 
 
Armenia 
------- 
 
¶8. In 1993, Turkey closed the border with Armenia in response 
to Armenia's occupation of Azerbaijani territory.  There are 
no diplomatic relations between the two.  Turkey says the 
border will remain closed until Armenia withdraws from at 
least some Azerbaijani territory, ceases pushing for Armenian 
genocide resolutions in third countries, and formally 
recognizes the borders established in the 1921 Kars Treaty. 
However, there is indirect trade between the two countries 
through Georgia, mostly exports of finished goods from Turkey 
to Armenia.  There are also four weekly direct charter 
flights between Istanbul and Yerevan. 
 
¶9. PM Erdogan and President Kocharian exchanged letters in 
April but failed to meet at a recent Council of Europe summit 
in Warsaw and indeed traded heavy charges and countercharges 
about the massacres of 1915.  We are encouraging the two 
sides to seize the opportunity for rapprochement.  The Turks 
lobby against an Armenian genocide resolution in the U.S. 
Congress, but stoutly resist our advice that their position 
on the issue would improve if the GOT moved forward on 
bilateral relations. 
 
Syria 
----- 
 
¶10. There is a widespread belief in the Turkish government 
and bureaucracy that Bashar Assad is a would-be reformer who 
should be supported against more hard-line Ba'athists in 
Syria; FM Gul has stated this publicly on at least one 
occasion.  The Turks are also seeking to expand their 
economic ties with Syria.  PM Erdogan visited Damascus in 
December; President Sezer visited in April; Mrs. Erdogan 
visited May 20-22.  Before the Sezer visit, incorrect reports 
in the Turkish media that the U.S. had pressured Sezer not to 
go fueled some anti-U.S. reactions.  The GOT has given pro 
forma support to UNSCR 1559. 
 
Broader Middle East and North Africa Initiative (BMENAI) 
--------------------------------------------- ----------- 
 
¶11. Turkey is a BMENAI partner, not a target country.  As a 
country that has recently undergone dramatic internal reform, 
Turkey has much to offer countries in the earlier stages of 
reform.  Turkey, together with Italy and Yemen, is 
co-sponsoring the Democracy Assistance Dialogue (DAD), a 
major BMENAI component designed to coordinate the efforts of 
governments and NGOs to promote democracy and good 
governance.  The Turks are hosting the first major DAD event, 
a June conference in Istanbul focusing on the role of women 
in society. 
 
¶12. Much of the Turkish public believes conspiracy theories 
that BMENAI is a U.S. plot to control Middle East oil and 
turn Turkey into a "moderate Islamic state" which would then 
serve as a "model" for the region.  However, by desisting 
from calling Turkey a "moderate Islamic state" or a "model", 
we have overcome initial official doubts about the initiative 
and forged a solid working relationship with the Ministry of 
Foreign Affairs on BMENAI. 
 
Turkey and the EU 
----------------- 
 
¶13. Turkey's European Union (EU) candidacy appeared to be on 
track when the EU  at the December 17 Summit agreed to open 
accession talks with Turkey in October of this year. 
However, events since the Summit have clouded the picture. 
When representatives of the EU Troika visited Turkey in 
March, they were disappointed to discover that Turkish 
leaders had no plan for enacting new human rights-related 
legislative reform.  Moreover, the Troika visit was marred by 
the violent crackdown by Istanbul police on International 
Women's Day protesters.  Turkish officials angered EU 
representatives with public statements implying that police 
were innocent and claiming that similar incidents take place 
in EU countries.  The Turkish Government has yet to name a 
lead EU negotiator or to organize the bureaucracy in 
preparation for the process of adopting the 80,000-page EU 
common practices  The EU, for its part, has delayed action on 
Turkey's candidacy, largely to avoid influencing the May 29 
French referendum on the EU Constitution. 
 
Resurgent Turkish Nationalism and Religious Intolerance 
--------------------------------------------- ---------- 
 
¶14. At the same time, Turkish nationalism is on the rise, as 
demonstrated by the recent hysteria over an alleged attempt 
by a group of Kurdish children to burn a Turkish flag. 
During a recent visit to Norway, PM Erdogan said Western 
powers are trying to divide Turkey.  Hitler,s "Mein Kampf" 
has risen to the top-10 on the bestseller lists of some of 
the country,s major bookstore chains. 
 
¶15. The Turkish Government,s Directorate of Religious 
Affairs (Diyanet) is conducting a public campaign to 
counteract what it prejudiciously calls the "threat" of 
Christian missionaries.  In March, the Diyanet drafted a 
sermon comparing missionaries in Turkey today with the 
soldiers of the Crusades and implying that Christians are 
polytheists.  The Diyanet distributed the sermon to mosques 
across the country, where it was delivered by imams March 11 
(Turkish imams are government employees who work for the 
Diyanet).  Officials from other government branches have 
strongly supported the anti-missionary campaign, and some 
Cabinet members have issued statements similar to the content 
of the sermon. 
 
¶16. We have seen no meaningful movement or even good will on 
the part of the Turkish State or government to reopen the 
Ecumenical Patriarchate's Halki seminary, closed since 1971, 
on terms acceptable to the Patriarchate.  By ostensibly 
conditioning the reopening of Halki on reciprocal steps by 
the Greek government toward Muslims living in Western Thrace, 
our Turkish interlocutors are discriminating against Turkey's 
own (Greek Orthodox) citizens by linking their interests to 
the actions of a foreign government.  Moreover, the Turkish 
authorities refuse to acknowledge the ecumenical nature of 
the Patriarchate and seem indifferent to the likelihood that, 
if the Ecumenical Patriarchate can no longer survive in 
Istanbul, its powers and authority will be claimed by Moscow. 
 
Security relations on the Upswing 
--------------------------------- 
 
¶17. 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 
positive footing and military-to-military relations continued 
to mend despite the Turkish military's frustration at our 
lack of kinetic action against the PKK terrorist 
organization's camps and leaders in northern Iraq and the 
more general downturn in overall relations 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. 
 In fact, it was the Deputy Chief of Defense, General Ilker 
Basbug, who turned this general 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. 
 
¶18. Despite improving mil-mil relations, the diminished role 
of the military in politics resulting from the EU accession 
process has increased the role of elected officials in our 
security relations.  For example, a June 2004 request to 
expand US operations at Incirlik Air Base through the 
establishment of a cargo hub to serve Operation Enduring 
Freedom (OEF) in Afghanistan and Operation Iraqi Freedom 
(OIF) went unanswered for ten months; although we were able 
to overcome military concerns about our proposed operations 
relatively quickly, the GOT withheld approval until late last 
month largely due to concerns about Turkish public opinion. 
Ongoing discussions on establishing a Weapons Training 
Deployment program at Incirlik, in which F-16s would be 
temporarily based there on a rotating basis for training 
purposes, should avoid this problem as Ankara has already 
determined that this is consistent with existing agreements 
and therefore does not require further government approval. 
 
Defense Industry Cooperation Weak 
--------------------------------- 
 
¶19. While mil-mil relations are improving, our defense 
industry relationship is declining.  Turkey has historically 
preferred US military equipment for NATO and US 
interoperability reasons and in April 2005 signed a $1B 
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 cancelled.  Bell Helicopter, which 
had won the original ATAK tender in 1997, lost it when the 
Turkey cancelled 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 
reviewing the changes but remains unconvinced the terms will 
be revised enough to allow its participation. 
 
¶20. General Atomics Aviation lost the re-issued UAV tender 
(re-issued in Nov. 2004) to an Israeli firm when it could not 
confirm its ability upfront to transfer significant 
technology.  Sikorsky Helicopter has been negotiating terms 
for a $400M sale of 12 Seahawk helicopters for three years. 
The sale relies on an extending an existing EXIM facility 
that had been extended previously and will run out in 2011. 
EXIM, however, has made clear to Sikorsky that a second 
extension is unlikely.  The one potential bright spot is 
Turkey,s Level III participation in the Joint Strike Fighter 
(F-35) program.  Turkey pledged to buy around 100 planes. 
However, it has requested significant ($5B) local procurement. 
 
Partner in GWOT 
--------------- 
 
¶21. 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 are expected to begin in June.  By 
moving cargo operations closer to Afghanistan and Iraq, 6 US 
military C-17 aircraft will be able to move the amount of 
cargo it currently takes 9-10 military aircraft to move from 
Germany.  Turkey fully and publicly supported the 
participation of all Iraqis in the Jan. 30 elections and 
remains active in reconstruction efforts, including providing 
electricity for Iraq, and training in Turkey for Iraqi 
diplomats and (as its contribution to the NATO training 
mission) Iraqi Security Forces.  Turkey took command of the 
International Security Assistance Force (ISAF) VII in 
Afghanistan in February 2005 for a six-month period, during 
which time it will contribute over 1,600 troops. 
 
¶22. 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).  Ankara has also been supportive of 
international efforts to press Iran to meet its commitments 
to the IAEA, fully backing the EU-3 dialogue. 
 
¶23. The Turkish military's Partnership for Peace Training 
(PFP) Center provides counterterrorism and other training to 
personnel from PfP partner countries.  The military is 
establishing a NATO Center of Excellence-Defense Against 
Terrorism that will provide more specialized training 
opportunities for both NATO partner nations, Allies and, 
under NATO's Iraq training mission, potentially Iraqis as 
well. 
 
¶24. Although an ally in the war on terrorism, Turkey's regime 
to combat terrorist financing remains weak; terrorist 
financing is not explicitly criminalized and Turkey is not 
yet in compliance with OECD Financial Action Task Force 
(FATF) terrorism finance recommendations.  Although the Turks 
are in the process of bringing their laws into compliance, 
there has been no sense of urgency or strong leadership at 
senior levels.  Aside from the weak legal regime, enforcement 
is hampered by a lack of expertise and inadequate interagency 
and international coordination. 
 
 
Iraq-Turkey: Generally Better News, but PKK Still Looms Large 
--------------------------------------------- ---------------- 
 
¶25. Iraq has generally dominated our agenda with Turkey since 
¶2003.  Our operations in Iraq remain extremely unpopular and 
represent a significant damper on our bilateral relations. 
GOT leaders stood by while the irresponsible Turkish press 
carried outrageous coverage of counter-insurgency operations 
in Iraq, culminating with the Fallujah operation in November 
2004; papers here "reported" on U.S. use of WMD and mass 
rape.  The head of parliament,s human rights committee, 
Mehmet Elkatmis, accused the U.S. of carrying out a genocide 
worse than Hitler,s.  Turkish concerns about the aspirations 
of the Iraqi Kurds led both the press (and some Turkish 
officials) to accuse us of conspiring to hand over Kirkuk to 
the Kurds, after which they could use the oil-rich province 
as the economic and political base for an independent Kurdish 
state. 
 
 
¶26. Since the Jan. 30 election, Turkey has stepped up its 
political support for Iraq.  The GOT has accelerated its 
training efforts for Iraqis and issued increasingly positive 
statements offering crucial political support for the ITG and 
the constitutional process.  (NOTE: The future of Kirkuk and 
the continuing PKK terrorist presence remain sensitive 
issues, however.  END NOTE.)  Perhaps taking its cue from GOT 
leaders, the sniping in the Turkish press on Iraq has gone 
down considerably in recent months. 
 
¶27.  These positive developments aside, Turks are angry that 
the coalition has failed to take any kinetic action against 
the PKK terrorist organization, a violent, Marxist-Leninist 
Kurdish nationalist group that Turkey has fought since the 
1980s.  The Turks will tell you that over 30,000 people have 
died as a result of PKK terrorism.  PKK's leadership and 
command and control are based in northern Iraq and operate 
there essentially unimpeded.  We have told the Turks that we 
are committed to dealing with the PKK, but that the 
insurgency has simply not allowed us to devote the resources 
necessary to a military operation. 
 
 
Economy 
------- 
 
¶28. 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% last year and 
should grow at least 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 opaque legal and regulatory environment. 
 
¶29. The benefits of growth are not being felt by average 
Turks. Annual income per person is currently about $4000 per 
year.  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 
delayed and will also entail large costs, such as for 
upgrades needed to meet EU environmental standards. 
 
¶30. In large part because of the slowness of reforms 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, which 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. 
 
¶31. Turkey has sought the creation of "Qualifying Industrial 
Zones" under the U.S.-Israel Free Trade Agreement that would 
allow for duty and quota free export to the U.S. of products 
containing a minimum share of Israeli input.  However, the 
Turkish government's insistence that such QIZs include 
textile products -- and the opposition of U.S. textile 
producers and negative lobbying of Congress by the Turkish 
Exporters Chamber-- blocked progress on this initiative, 
which would require legislative action.  At the same time, 
Turkey was recently confirmed on USTR's Special 301 "Priority 
Watch List" for deficiencies in its protection of 
intellectual property, especially for confidential testing 
data used by pharmaceutical companies to obtain marketing 
approval for drug products. 
 
¶32. 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 1.5 mbd 
Baku-Tblisi-Ceyhan pipeline should be completed later this 
year, and approximately 3 million barrels flows 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. 
 
EDELMAN