VZCZCXRO9759
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK RUEHMOS
DE RUEHAK #1392/01 0741600
ZNR UUUUU ZZH
P 151600Z MAR 06
FM AMEMBASSY ANKARA
TO RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0587
RUEHC/SECSTATE WASHDC PRIORITY 3999
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEHDA/AMCONSUL ADANA 0508
RUEHIT/AMCONSUL ISTANBUL 0051
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHEHAAA/NSC WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEUITH/ODC ANKARA TU
RUEKJCS/JOINT STAFF WASHDC//J-3/J-5//
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC//USDP:PDUSDP/ISA:EUR/ISA:NESA/DSCA//
RHMFIUU/425ABS IZMIR TU//CC//
RHMFIUU/39ABG INCIRLIK AB TU

UNCLAS SECTION 01 OF 02 ANKARA 001392 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD EPET PREL TU IZ
SUBJECT: TURKEY-IRAQ HABUR GATE SLOWS TO A TRICKLE 
 
REF: A. ANKARA 775 
 
     ¶B. ANKARA 278 
 
ANKARA 00001392  001.2 OF 002 
 
 
SENSITIVE BUT UNCLASSIFIED - COORDINATED WITH CONSULATE ADANA 
 
¶1.  (SBU) SUMMARY: fuel shipments from Turkey to SOMO in Iraq 
remain suspended for lack of implementation of the February 
15 agreement between GOI and GOT to resolve persistent 
arrears.  In combination with the imposition of new truck 
licensing regulations, particularly onerous for older trucks, 
southbound truck traffic has decreased by a factor of two. 
END SUMMARY. 
 
¶2.  (SBU)  Although the GOT has long been supportive of 
facilitating throughput at the single bottleneck Habur Gate 
between Turkey and northern Iraq, traffic through this key 
trucking lifeline has recently declined sharply - roughly by 
a factor of two - due to two key factors:  the continuing 
SOMO "humanitarian fuel" stoppage and new Turkish regulations 
on truck licensing.  While 1200-1500 trucks was the normal 
daily southbound volume (tankers and trucks), the numbers in 
March are down to 500-700.  During the best of times, we have 
described Habur as strained but functioning, generating a 
formidable backlog queue.  With the above factors, the 
backlog still exists, but has been greatly reduced (20 km 
instead of 100 km). 
 
¶3.  (SBU)  Despite completion of an agreement on February 15 
(Ref A) - negotiated after four days of difficult discussions 
- SOMO loading has yet to restart.  SOMO loading was stopped 
by the GOT on January 21 because of unsustainable SOMO 
arrears - and a repeated history of partial payments with 
arrears regularly reaching as high as $1 billion (REf B). 
Because of significant backlog, SOMO product continued to 
cross Habur Gate through mid February, but now there has been 
almost a month of virtually no SOMO product crossing the 
gate.  TPIC (state owned Turkish Petroleum International 
Corporation and a key fuel supplier) told us that the impact 
of the stoppage was also cushioned by stock-piling in 
northern Iraq.  These two mitigating factors are long gone. 
 
¶4.  (SBU)  Under the February 15 agreement, SOMO would 
negotiate new contracts with Turkish suppliers, pay off the 
agreed arrears of $640 million in nine installments over 2006 
with 3% interest - with two payments in March, arrange 
acceptable letters of credit for future deliveries, and 
continue discussion on about $292 million in contested 
amounts.  All suppliers we have contacted complain bitterly 
that SOMO has not taken any of these steps, including no 
installment payments and presentation of unacceptable letters 
of credit.  We understand that Iraqi officials at the weekly 
border meetings at Habur insist that SOMO has made payments. 
 
 
¶5.  (SBU) Suppliers also complain about a new GOT trucking 
rquirement for licensing all trucks and providin incentives 
for retiring trucks older than 22years old (prohibitive 
licensing fee) which has greatly reduced trucks able to 
traverse Habur Gate.  Finally, there is on-going construction 
at the gate which has had a negative impact on processing 
speed. 
 
¶6.  (SBU) Suppliers like TPIC and Delta, and the Turkey-Iraq 
Business Council, which represents suppliers, express great 
frustration on the lack of progress and - in their view - bad 
faith of SOMO.  They say they have the support of the GOT, 
but recognize that the GOT is not going to authorize any 
shipments until SOMO resolves the arrears problem by 
implementing the agreement.  Meanwhile, they are left 
financing the significant debt and unused inventories.  They 
tell us there are significant shortages of fuel product in 
northern Iraq with associated high black market prices, along 
with indirect knock-on effect on prices of all other goods. 
Although sustainment has generally been unaffected by these 
problems, refueling returning trucks will be more difficult - 
and if the problem is ever solved - there will eventually be 
a deluge of SOMO trucks. 
 
ANKARA 00001392  002.2 OF 002 
 
 
 
Visit Ankara's Classified Web Site at 
http://www.state.sgov.gov/p/eur/ankara/ 
 
WILSON