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UNCLAS SECTION 01 OF 04 ISTANBUL 001504 
 
SIPDIS 
 
C O R R E C T E D  C O P Y  (PARAGRAPH 2 AND Z CODE CHANGED) 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR H, EUR, AND EUR/NB 
FOR SENATOR MCCAIN FROM AMBASSADOR WILSON 
 
E.O. 12958: N/A 
TAGS: AFIN AMGT ASEC DA GG IT MW OREP TU
SUBJECT: SCENESETTER FOR AUGUST 25-26 VISIT OF CODEL MCCAIN 
TO TURKEY 
 
REF: STATE 133481 
 
ISTANBUL 00001504  001.6 OF 004 
 
 
¶1. (SBU) SUMMARY: Mission Turkey warmly welcomes the visit of 
Codel McCain to Turkey.  Turkey is an ally in the Global War 
on Terrorism (GWOT), facilitating the distribution of 
supplies and fuel to the coalition in Iraq and supporting the 
NATO Training Mission (NTM-I) there; publicly calling on Iran 
to comply with its IAEA commitments; and pressuring Syria and 
Hamas to renounce their support for terrorism.  Turkey is 
considering contributing forces to UNIFIL in Lebanon. 
Earlier this month, Turkey began sharing command of 
ISAF-Central with France and Italy and plans to open its 
first Provincial Reconstruction Team (PRT) in Afghanistan by 
November. 
 
¶2. (SBU) SUMMARY, con't: But there are challenges.  Defense 
industry cooperation is on the decline.  PKK terrorist 
attacks have resulted in pressure on the government to strike 
at PKK safehavens in northern Iraq.  We are committed to 
helping Turkey address PKK terrorism.  Turkey's EU accession 
aspirations are frustrated by slow implementation of reforms 
and Cyprus-related issues.  END SUMMARY. 
 
STRATEGIC DIALOGUE 
------------------ 
 
¶3. (SBU) During an April 25 visit to Ankara, Secretary Rice 
unveiled with Foreign Minister Gul plans to regularize a 
series of bilateral consultations on issues such as Iraq, 
Iran, the Caucasus and Central Asia, economic and mil-to-mil 
relations, among others.  A Shared Vision and Structured 
Dialogue document was finalized and publicly released during 
a visit by Gul to Washington on July 5.  As a majority Muslim 
country that straddles Europe and the Middle East, Turkey 
shares a history and culture with many countries of US 
concern and is interested in playing a more active role. 
 
A PARTNER IN GWOT 
----------------- 
 
Lebanon: 
 
¶4. (SBU) FM Gul visited Lebanon August 16 to show Turkish 
support for UNSC Resolution 1701 and to discuss a possible 
contribution of Turkish forces to UNIFIL.  PM Erdogan has 
spoken positively about Turkish participation, but the 
government has not yet made a decision on whether and what 
type or numbers of troops to provide.  Gul traveled to Israel 
on August 20 to continue consultations.  While recognizing 
Hezbollah's complicity in the crisis, since the start of the 
conflict Turkey pushed hard for an immediate cease-fire.  The 
Turkish public has responded to graphic media reports of the 
carnage and increasingly has blamed Israel -- and to a large 
extent, the US -- for the current crisis.  The Jewish 
community here talks of a rise in anti-Semitism.  Turkey 
welcomed and assisted thousands of evacuees from Lebanon in 
late July, including approximately 1700 Americans. 
 
Iraq: 
 
¶5. (SBU) Turkey's agreement to allow the use of its territory 
as a logistical hub has been a crucial asset in 
our Iraq operations.  Two-thirds of gasoline and diesel fuel 
shipments (3 million gallons per day) for the Iraqi 
people and 25% of sustainment fuel for the coalition crosses 
into Iraq through the Ground Line of Communication 
at Habur border crossing from Turkey.  Since Turkey approved 
the use of Incirlik Air Base as a cargo hub to support 
coalition operations in Iraq in May 2005, over 152 million 
pounds of equipment has been shipped to US troops.  Six C-17 
aircraft now deliver from Incirlik the amount of supplies it 
took 9-10 planes to deliver from Germany.  Additionally ten 
KC-135 tanker aircraft based at Incirlik since 2003 have run 
2800 refueling sorties, delivering 192 million pounds of fuel 
in support of Operation Enduring Freedom and Operation Iraqi 
Freedom.  Turkey is also considering our request to 
retrograde equipment out of Iraq through its ports.  Turkey 
has four personnel assigned to NTM-I in Iraq and, under this 
rubric, has trained 57 Iraqi military officers in Turkey. 
Iraqis have pledged to send officers to at least seven 
additional courses this year. 
 
ISTANBUL 00001504  002.6 OF 004 
 
 
 
¶6. (SBU) Turkey shares the US goal of a unified, democratic 
Iraq that is secure within it borders.  While Kurdish 
aspirations and the PKK presence in northern Iraq remain a 
concern, the government is contributing to Iraq's success. 
It supported the participation of all ethnic and religious 
groups in the elections and the constitutional referendum. 
It hosted a multi-party conference on the Iraqi constitution, 
a dialogue of hard-line Sunni leaders with US Ambassador 
Khalilzad, and a meeting of tribal leaders from the city of 
Talafar in an effort to calm the situation there.  It 
provided training to over 300 Iraqi diplomats and political 
party members, and spearheaded a "neighbors meetings" process 
which has helped Iraqi government leaders interact with their 
regional counterparts. 
 
¶7. (SBU) Turkish-Iraqi bilateral trade in 2005 was $2.87 
billion, of which $2.42B was Turkish exports to Iraq.  Turkey 
exports 270 MW of electricity to Iraq.  Both countries aim to 
increase electricity exports from Turkey to 1000MW, which 
equates to 25% of Iraq's current peak capacity.  Turkey has 
pledged $50M in assistance to Iraq for energy, health and 
other projects, which remains mostly unfunded for security 
reasons.  Turkey's port of Ceyhan is the terminus of the oil 
pipeline from Kirkuk. 
 
Afghanistan: 
 
¶8. (SBU) Turkey has twice successfully led the International 
Security Assistance Force (ISAF) in Afghanistan, most 
recently from February to August 2005.  In early August, it 
began sharing joint command of ISAF-Central in Kabul for a 
two-year period.  By November, it will open its first PRT in 
the neighboring province of Wardak.  PM Erdogan visited 
Afghanistan in spring 2005 and subsequently increased 
Turkey's pledged assistance ten-fold to $100M.  This will be 
allocated in $16M increments for five years to build schools, 
hospitals, medical clinics and drinking water wells 
throughout the country.  Four hospitals have already been 
constructed.  The GOT provides counter-narcotics training in 
Turkey to Afghan security forces and will initiate such 
training in Afghanistan this year under the auspices of the 
Wardak PRT.  President Karzai demonstrated his gratitude for 
Turkey's assistance by participating in a March 
counter-terrorism conference at Turkey's NATO Center of 
Excellence for the Defense Against Terrorism. 
 
Other: 
 
¶9. (SBU) Turkey continues to contribute forces to the 
peacekeeping efforts in the Balkans and provides training to 
Georgian security forces, including for pipeline security. 
It has contributed $41M in equipment to Georgia over the past 
six years, and has trained some 1400 Georgian personnel.  In 
Azerbaijan, Turkey has provided some $150M in equipment and 
over $100M in training and facilities over the past six 
years. 
 
INCREASING PKK THREAT 
--------------------- 
 
¶10. (SBU) Since declaring an end to its "cease-fire," in May 
2004, the PKK has stepped up bomb attacks 
in Istanbul and increasingly clashed with Turkish security 
forces in the country's southeast.  A PKK off-shoot, the 
Kurdish Freedom Hawks (TAK), has warned foreigners to stay 
away from Turkey and has carried out attacks in tourist 
centers.  The funerals of 14 PKK terrorists killed in a March 
operation led to violent unrest in Diyarbakir and 
other southeastern cities.  Some 500 Turkish citizens have 
been killed so far this year in PKK violence, and televised 
news programs are filled with the funerals of Turkish 
security forces.  Tourism bookings, which were expected to 
exceed last year's record levels, are slightly down from 
2005, although revenue remains flat.  Two August bombings in 
the heart of Istanbul's tourist area resulted in several 
injuries and may further deter visitors. 
 
¶11. (SBU) The PKK issue is the biggest irritant in bilateral 
relations.  The government welcomes our efforts with European 
allies to eliminate the PKK's financing sources and support 
 
ISTANBUL 00001504  003.6 OF 004 
 
 
networks in Europe and our intelligence-sharing program, but 
both the GOT and the public insist on US action against the 
PKK presence in northern Iraq.  While recognizing that the 
insurgency prevents coalition troops from engaging the PKK in 
Iraq, the GOT remains frustrated at its inability, and 
perceived US unwillingness, to stop attacks it believes are 
emanating from the other side of its border. 
 
¶12. (SBU) Security forces have had some success against the 
PKK in Istanbul and Ankara, where significant caches of 
plastic explosives were found and suspects arrested. 
Increased terrorism has hastened the military's push to 
strengthen its troop presence along Turkey's border with 
Iraq, as it does every spring.  In July, public parallels 
between Israel's right to defend itself in Lebanon and the 
PKK situation were drawn.  The government responded to public 
outcries for a cross-border operation against the PKK by 
renewing pressure on Iraq and the US to take concrete steps. 
The Iraqi government recently pledged to take steps.  The US 
is working with Turkey and Iraq to establish a high-level 
trilateral mechanism for joint work on the problem. 
 
REGIONAL DIPLOMACY: IRAN AND SYRIA 
---------------------------------- 
 
¶13. (SBU) Given its historical, cultural and religious ties 
with countries in the region and its geographic location 
bridging both east and west, Turkey feels both a right and a 
responsibility to engage countries of concern on issues of 
importance to the international community.  Turkey has worked 
in recent years to strengthen ties with Iran and Syria.  It 
believes that, as the only Muslim country that has good 
relations with both Israel and the Palestinians, it can play 
a constructive role in the peace process.  Despite Western 
disapproval, however, the foreign minister, representing the 
ruling Justice and Development Party (AKP), welcomed a Hamas 
delegation to Ankara in February 2006, and the prime minister 
and foreign minister continue to engage the Iranian and 
Syrian governments.  In all cases, they assure us, they are 
sending the right messages in private. 
 
¶14. (SBU) The MFA, military and many in the AKP government 
view a nuclear Iran as a threat to Turkey but all view 
diplomacy as the only road to a solution and therefore insist 
on engagement.  The GOT is averse to broad economic 
sanctions that could disrupt a growing commercial 
relationship with Iran, particularly energy imports.  The 
government's public statements have significantly 
strengthened since Iran resumed uranium enrichment.  FM Gul 
visited Tehran in June and July to push for acceptance of the 
P5 1 package; Iranian FM Mottaki has visited Turkey twice 
since then, on his own initiative. 
 
CYPRUS THREATENS TURKEY'S EU BID 
-------------------------------- 
 
¶15. (SBU) The EU has expressed frustration with what it 
perceives as lackluster GOT efforts to fully implement 
democratic reforms integral to Turkey's EU bid.  Indictments 
against novelist Orhan Pamuk and other writers and 
intellectuals for statements purportedly undermining the 
Turkish identity, and unresolved issues with Turkey's Kurdish 
population which are exacerbating the PKK problem, give 
ammunition to those who want to prevent Turkey's accession. 
But the lack of a settlement of the Cyprus question may be 
the biggest immediate threat to Turkey's EU bid.  Turkey 
remains bitter over the 2004 Greek Cypriot vote against UNSYG 
Annan's plan for a comprehensive settlement and, in 
particular, the EU's failure to produce the promised aid and 
trade package to reward Turkish Cypriots for their "yes" 
vote.  Under its EU customs agreement, amended in 2005 to 
include all new EU members -- including Cyprus, Turkey must 
open its sea and airports to Greek Cypriot vessels.  Turkey 
is unwilling to do so in absence of some EU measure to end 
the isolation of the Turkish Cypriots.  This issue could 
stall Turkey's EU negotiations. 
 
ECONOMY RECOVERING STRONGLY, BUT VULNERABLE 
------------------------------------------- 
 
¶16. (SBU) The AK Party government has implemented key 
 
ISTANBUL 00001504  004.6 OF 004 
 
 
economic and structural reforms that have supported the 
economic recovery from the deep 2001 financial crisis. An 
average GDP growth rate of nearly 8% over the 
past three years is one of the highest in the world, foreign 
investment has strengthened, and inflation has been subdued. 
The IMF is currently overseeing a $11.8 billion stand-by 
program and the World Bank's loan portfolio of $6 billion is 
one of the largest for any country. Reforms and optimism 
engendered by the EU accession process have also bolstered 
economic performance.  Yet, despite these achievements, the 
current account deficit is large (about 7% of GDP this year) 
and the government remains heavily indebted. This leaves the 
economy vulnerable to market swings that could threaten 
economic and political stability. Unemployment and poverty 
also remain serious problems. These vulnerabilities were 
highlighted since mid-May by a global market pullback that 
coincided with increased political uncertainty in Turkey, 
leading to a 16% fall in the exchange rate, an 18% drop in 
the stock market and a sharp increase in domestic interest 
rates. The central bank's and government's strong economic 
policy response, which included a 4% hike in official 
interest rates, seem to have allowed the economy to weather 
the turbulence and markets have nearly returned to their 
pre-May level. 
 
DEFENSE INDUSTRY COOPERATION DECLINING 
-------------------------------------- 
 
¶17. (SBU) Defense industry cooperation, once the strongest 
aspect of our military-to-military relationship, is in 
decline.  No US firm has won a direct commercial sale since 
Boeing was awarded a contract for an Airborne Early Warning 
and Control (AEW&C) aircraft in 2002.  In 2004, three tenders 
(UAVs, Main Battle Tanks, and attack helicopters) were 
canceled.  Two US firms, Boeing and Bell, were interested in 
a second attack helicopter tender, but declined to 
participate due to onerous liability and technology transfer 
requirements.  (Several non-US firms did submit bids.) 
Raytheon bowed out of contention for an aircraft trainer 
tender, and Sikorsky may choose not to participate in a 
tender for 54 utility helicopters for the Turkish Armed 
Forces and Forestry Service for the same 
reason.  Both in Ankara and in Washington, US firms and the 
USG have raised the technology transfer and liability 
concerns with Turkey's Ministry of Defense and Defense 
Industry Undersecretariat (SSM).  Despite both Turkish 
military and government insistence that it wants US 
competition in these tenders, SSM has resisted making the 
necessary changes to the tenders to ensure it. 
 
AGGRESSIVE COUNTER-NARCOTICS PROGRAM 
------------------------------------ 
 
¶18. (SBU) Turkey remains a significant transit country for 
Southwest Asian heroin destined for European markets. 
Turkish law enforcement vigorously pursues opiate traffickers 
and have made extensive opiate seizures.  Arrests resulting 
from large seizures are prosecuted and generally result in 
lengthy sentences.  Over eight metric tons of heroin were 
seized in Turkey in 2005, while nearly ten metric tons were 
seized in 2004.  Several of the 
world's largest verified opiate seizures have been made in 
Turkey in recent years, including 7.5 metric tons of morphine 
base that were captured in a single seizure in 2002.  In 
2004, 4.4 metric tons of morphine base were seized and in 
2005 there were two heroin seizures of over 1,000 kilograms 
each.  Turkish law enforcement is actively participating in 
DEA's Operation Containment, a regional plan for combating 
Afghan opiates. 
WILSON