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P 261501Z SEP 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 8999
INFO RUCPDOC/USDOC WASHDC PRIORITY
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RUEHIT/AMCONSUL ISTANBUL PRIORITY 1358
RUEHDA/AMCONSUL ADANA PRIORITY 1145
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UNCLAS SECTION 01 OF 02 ANKARA 005625 
 
SIPDIS 
 
DEPT PASS USTR FOR LERRION 
TREASURY FOR OASIA 
USDOC/ITA/MAC/CRUSNACK 
DEPT PASS EXIM FOR MARGARET KOSTIC 
USDA OSEC FOR DEP U/S TERPSTRA 
USDA FAS FOR OA YOST; ITP/SHEIKH; FAA/DEVER 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EINV BEXP TU
SUBJECT: CARGILL'S SWEETENER PLANT CONTINUES TO SOUR IN TURKEY 
 
 
¶1. (SBU) Cargill representatives will meet with Turkish PM Erdogan 
on September 30 in New York to once again ask for his intervention 
in continuing legal troubles regarding Cargill's sweetener plant 
near the city of Bursa in northwestern Turkey.  In addition to the 
meeting with Erdogan, we understand Cargill has requested a meeting 
with EB A/S Daniel Sullivan.  The following provides an update on 
the Cargill situation and recommended next steps for their 
representatives in Turkey. 
 
UPDATE ON CARGILL PLANT'S STATUS IN TURKEY 
------------------------------------------ 
 
¶2. (SBU) On March 17, 2006, the 10th Chamber of the Council of State 
(the Danistay - Turkey's administrative court) issued a stay order 
canceling the Private Industrial Zone designation for the plant 
location under a 2005 law that had supposedly resolved the zoning 
dispute that has plagued the investment since its inception. 
Cargill appealed this ruling to the General Assembly of the 
Danistay, which generally rules in accordance with lower Chamber 
decisions.  On September 14, 2006, the 6th Chamber of the General 
Assembly agreed with the lower court's decision.  Following this 
decision, the local governing body of the town in which the plant is 
located, Gemlik, which is independently elected, delivered a 
"cancellation letter" to Cargill and gave a deadline of October 11 
to close the plant. 
 
¶3.  (SBU)  PM Erdogan met with local Cargill officials during a 
recent visit to Bursa and asked the Governor of Bursa, who is 
appointed by the Prime Ministry, and AK Party Deputy President Faruk 
Celik, who was with him during the visit, to resolve the problem. 
Celik intervened with Osman Pepe, Minister of Environment and 
Forestry, to argue that Cargill's environmental permits should not 
be cancelled because of the High Court's ruling, which does not 
directly address such permits.  Cargill maintains that because the 
previous law ended the original court cases, they would need to be 
reintroduced in the court system for a final decision before the 
plant can be closed.  The Minister is currently evaluating the case 
with his General Counsel. 
 
BACKGROUND 
---------- 
 
¶4. (SBU) In the largest foreign investment in Turkey's agricultural 
sector and the company's largest investment worldwide, Cargill 
invested $150 million in a starch/sweetener plant in the town of 
Orhangazi, near Bursa, Turkey, that began production in 2000. 
Although the investment had been approved by local authorities and 
was supported by the GOT, local NGO's filed court challenges against 
the Ministry of Environment and Forestry that sought to nullify the 
environmental permits approved by the Ministry by alleging that the 
land was zoned for agricultural, not industrial, use and created an 
environmental hazard.  In an attempt to permanently resolve the 
matter, an application was made in 2002 to the Turkish Parliament 
for conversion of the land into a Private Industrial Zone.  On July 
5, 2005, after a long advocacy campaign by Cargill and USG 
officials, the Council of Ministers approved this legislation, which 
ended the previous court cases by changing the zoning laws and 
environmental permit requirements for the plant.  The original NGO's 
who filed the court challenges appealed this legislation to the 
Danistay. 
 
CARGILL NEEDS TO INVOLVE OTHER GOT MINISTRIES 
--------------------------------------------- 
 
¶5.  (SBU)  The issue is complicated by the fact that it is in the 
Turkish court system.  Local Cargill representatives have emphasized 
that the GOT supports their position, noting that the legal 
challenges are against the government's prior approvals of licenses 
and permits.  Unfortunately, Cargill has seen the issue in purely 
political terms and exclusively lobbied the Prime Minister's office, 
although we have encouraged them to reach out to other government 
ministries.  For example, the Treasury Foreign Investment Department 
has told us it is willing to work with Cargill to devise a new law. 
 
¶6.  (SBU)  Our economic and commercial officers, and the Ambassador, 
have raised this issue with GOT officials.  The issue was also 
raised by Commerce Deputy Secretary Sampson during a March 2006 
meeting with State Minister for Foreign Trade Kursad Tuzmen.  In an 
August letter to D/S Sampson aa Foreign Trade Undersecretariat 
official stated that "since legal proceedings have been started by 
 
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several non-governmental organizations...for the moment we need to 
wait for the final court ruling in the case." 
 
¶6. (SBU) We would suggest that A/S Sullivan deliver the following 
message to Cargill: 
 
-- Our embassy officials continue to follow this matter closely and 
discuss it with government officials. 
 
-- In a recent meeting, the Treasury Ministry's Foreign Investment 
Department told our economic section that they would be open to 
discussing this issue with you and assisting Cargill in anyway 
possible. 
 
-- While the PM's office has been very supportive of your efforts, 
we strongly encourage you to reach out to other ministries, 
including Treasury and Environment and Forestry Ministry. 
WILSON