VZCZCXRO6193
RR RUEHDA
DE RUEHAK #3658/01 1721316
ZNR UUUUU ZZH
R 211316Z JUN 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 6745
INFO RUEHIT/AMCONSUL ISTANBUL 0847
RUEHDA/AMCONSUL ADANA 0901
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 ANKARA 003658 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN TU
SUBJECT: BUSINESS OPTIMISM IN SMALL ANATOLIAN CITY 
 
REF: (A) ANKARA 3656 (B) ANKARA 2673 (C) 05 ANKARA 6326 
 
¶1. (SBU) Summary: Afyon, three hours southwest of Ankara, is a 
central Anatolian city of 150,000, home to marble mines and Turkey's 
licit opium production.  A recent visit to Afyon revealed a city 
with extensive commercial ties to the U.S. that is trying to build 
up its tourism industry.  Businessmen and industry experts told us 
that, despite successful marble and food production sectors, 
uncertainties over the exchange rate and the overall economic 
situation loom.  End summary. 
 
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AFYON'S LIFEBLOOD: THE MARBLE INDUSTRY 
-------------------------------------- 
 
¶2. (SBU) Afyon is one of Turkey's largest marble-producing regions, 
with over 400 local businesses involved in the sector.  Several 
marble mines are located in Iscehisar, 20 kilometers northeast of 
Afyon's city center.  Melih Yurter, president of Afyon's Chamber of 
Commerce and Industry, told us that 20 percent of Turkey's marble 
exports come from within Afyon's provincial borders and nearly 70 
percent of these exports are destined for the U.S. 
 
¶3. (SBU) Hakan Emre, general manager of marble producer Tureks, told 
us that Afyon's smaller marble companies lack the infrastructure to 
make international export contacts, leaving them vulnerable to 
swings in local demand.  Larger companies subcontract production to 
the smaller firms.  Emre noted that competition in the U.S. market 
brings prices down, but said that he wants to increase the U.S. 
share in his company's portfolio because U.S. demand is 
ever-increasing. 
 
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FOOD PRODUCTION 
--------------- 
 
¶4. (SBU) Second only to marble, food production is an increasingly 
important part of Afyon's local economy.  Yurter told us that 
one-third of Istanbul's meat consumption comes from Afyon.  The 
region is known for its sausage and cream, and it is home to sugar 
and sugar beet factories.  Yurter told us that 22 percent of 
Turkey's eggs are produced in Afyon, and that poultry production is 
back to normal after the country's avian influenza outbreak earlier 
this year.   Yurter noted that, although there were no incidents in 
Afyon, the outbreak had a psychological impact. 
 
¶5. (SBU) Afyon, whose name means "opium" in Turkish, is also home to 
Turkey's largest poppy and alkaloid producing plant (ref A). 
However, Yurter told us that the plant does not have a significant 
economic impact on the province. 
 
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THERMAL TOURISM ON THE RISE 
--------------------------- 
 
¶6. (SBU) Yurter told us that the Ministry of Culture and Tourism 
recently identified four different thermal areas in the province, 
and will be offering incentives for tourism development.  Afyon is 
already home to two thermal resorts, with plans in the works to 
construct a third in the coming year.  Yurter explained that Afyon 
has adapted the traditional "hamam" (Turkish bath) to the more 
modern "spa" culture.  He views thermal tourism as one of the areas 
of highest potential growth in the province.  The Chamber of 
Commerce and Industry is also looking for ways to promote tourism to 
the region's historic ruins and picturesque rock structures. 
 
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FUTURE CHALLENGES 
----------------- 
 
¶7. (SBU) Afyon's businesses are feeling the impact of recent 
volatility.  Emre told us that these uncertainties have affected his 
industry, saying that keeping an eye on the economy and exchange 
rate is "like a second job for us."  Yurter, on the other hand, 
expressed optimism regarding the recent "correction" in the value of 
TL, due its positive impact on Afyon exporters.  Yurter listed high 
energy and labor costs as major problems for Afyon industry, 
especially given increasing competition from China. 
 
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COMMENT 
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¶8. (SBU) Given its location on the road to the Mediterranean resort 
town of Antalya, Afyon has tourist potential.  Although economic 
uncertainty affects Afyon as it does the majority of Turkish cities, 
both Emre and the members of the Chamber of Commerce and Industry 
were relatively upbeat about the situation in the province and 
prospects for the future. 
 
 
ANKARA 00003658  002 OF 002 
 
 
WILSON