VZCZCXRO1730
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHAK #5993/01 2901411
ZNR UUUUU ZZH
P 171411Z OCT 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 9460
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEHIT/AMCONSUL ISTANBUL 1478
RUEHDA/AMCONSUL ADANA 1240
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 ANKARA 005993 
 
SIPDIS 
 
USDOC FOR ITA/MAC/CRUSNACK 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD TU
SUBJECT: WILL TURKEY REALLY BOYCOTT FRENCH COMPANIES IN THE WAKE OF 
ARMENIAN GENOCIDE VOTE? 
 
Ref: Ankara 5891 
 
ANKARA 00005993  001.2 OF 002 
 
 
¶1. (SBU) Summary:  The lower house of the French parliament's 
October 12 decision to make denial of the Armenian "genocide" 
illegal elicited strong reactions from Turkey's business leaders and 
politicians (ref A).  Although most politicians, including PM 
Erdogan, urged public caution until the French Senate reaches its 
final decision, and while business leaders cautioned Turkish 
consumers to remain calm and consider the negative effects such 
actions might have on the Turkish economy, the Turkish Consumers' 
Rights Union called for the boycott of one French company per week, 
starting this week with Total petroleum products.  Turkish 
bureaucrats are still assessing the situation, and the Parliament 
and Defense Industry Executive Committee met on October 17 to 
discuss the GOT's official response.  While we expect the matter 
will quickly die down if the legislation is not approved by the 
French Senate, we anticipate continued strong rhetoric from public 
and private officials as the debate continues and severe political 
retaliation should it become law.  End summary. 
 
Business'sReaction 
------------------- 
 
¶2. (SBU) Turkish business and government representatives were mostly 
cautious over the weekend in their statements about the vote by the 
lower house of the French parliament October 12 to make a denial of 
the 1915 Armenian "genocide" illegal.  The Turkish Consumers' Rights 
Union has called for a boycott of one French product every week, 
beginning this week with the petrol company Total, which currently 
has 500 gas stations in Turkey.  The Aegean Garment Industrialists 
Association also announced their decision to withdraw in protest 
from four upcoming French trade fairs. 
 
¶3. (SBU) In a public statement, the Vice Chairman of Turkey's big 
business association, the Turkish Industrialists' and Businessmen's 
Association (TUSIAD) Vice Chairman, Pekin Baran, said that Turkey's 
best response to this decision would be to expedite political 
reforms and move in the direction of the EU.  On the other hand, he 
added that the association would focus on how the French legislation 
violated human rights and possibly even the authority of the 
parliament. 
 
¶4. (SBU) The leading business federation, the Turkish Union of 
Chambers and Commodity Exchanges (TOBB) President, Rifat 
Hisarciklioglu, criticized the GOT for its inability to play the 
state tender "trump card."  He said the GOT could have used its 
nuclear plant or defense tenders as a tool for France not to bring 
this legislation to the agenda.  He noted that the effectiveness of 
a boycott against one country's products depended on the trade 
volume with that country and warned that boycotts of French goods 
could actually bring more harm to Turkey, whereas blocking French 
companies' access to big state tenders would send strong messages. 
TOBB's Director for EU and bilateral economic relations told us that 
while NGOs and Chambers of Commerce are pressuring TOBB to call for 
a boycott, it cannot do so.  He added that TOBB recognizes the thin 
line between French imports and products produced and sold in Turkey 
by French companies.  It is this second category, TOBB believes, 
which is more prevalent and therefore a nationwide boycott could 
hurt Turkey more than France. 
 
¶5. (SBU) Foreign Investors Association (YASED) President Saban 
Erdikler warned that the cost of starting such public campaigns 
would be higher than its benefit.  He argued that the first response 
to this political issue should also be political, and the economic 
sanctions could follow depending on the results of the first. 
 
Government's Response 
--------------------- 
 
¶6. (SBU) State Minister for Foreign Trade, Kursad Tuzmen, commented 
that the law could not avoid having a negative impact on the 
commercial relations between the two countries.  However, Foreign 
Trade officials in charge of bilateral trade relations with France 
told us that they were still assessing the situation and had not 
made any decisions regarding an official course of action. 
According to media reports, the GOT sent a diplomatic note informing 
the French Embassy of its intention, should the proposal pass the 
French Senate, to take the matter to the French Constitutional Court 
and, failing a solution there, to the European Court of Human 
Rights. 
 
¶7. (SBU) In public statements, PM Erdogan encouraged the Turkish 
public to remain calm until a final decision is made by the French 
Senate.  He noted that Turkey's trade volume with France is only USD 
10 billion or approximately 1.5 percent of France's total trade. 
Based on these numbers, Erdogan questioned whether a boycott would 
 
ANKARA 00005993  002.2 OF 002 
 
 
be an effective way of dealing with the issue.  Parliament and the 
Defense Industry Executive Committee met on October 17 to discuss 
Turkey's reaction to the bill.  Specifically, the Defense Industry 
Executive Committee will evaluate the GOT's purchase of 51 attack 
helicopters.  South Africa's Denel, which is competing with Italy's 
Mangusta, is hoping to sell its Rooivalk helicopter.  However, the 
Rooivalk contains a significant number of French parts (between 
40-60%).  According to press reports, in a bid to stay in the 
competition, Denel has suggested that it can get those same parts 
from Sikorsky, a U.S. firm.  The Executive Committee may decide 
whether or not to accept one of the two bids or opt for a U.S. 
Foreign Military Sales (FMS) purchase. 
 
¶8. (SBU) In his speech immediately following the Parliament's 
October 17 discussion of this issue, FM Gul urged France to take 
into consideration the criticism coming not only from Turkey but 
from all around the world regarding this legislation.  He added that 
the GOT continues to consider the legal steps it might take to 
respond to the French legislation.  Gul referred to Franch as the 
"cradle of democracy and leader for freedom" and stated, "I would 
like to be clear on this:  if, despite all the criticism and 
warnings, this law is passed, the wounds opened by this action would 
be irreparable." 
 
¶9. (SBU) An EU diplomat in Ankara told us that it is forbidden for 
one Customs Union country to boycott another and that, if Turkey 
were to do so, it could bring serious problems for its accession 
process. 
 
¶10. (SBU) Comment:  It is obvious that the business opinion-makers 
in Turkey understand the possible negative repercussions of a French 
boycott.  Turkey's exports to France in 2005 amounted to USD 3.8 
billion, while imports amounted to USD 5.9 billion worth.  There are 
533 French companies doing business here.  French firms invested USD 
2.1 billion into Turkey in 2005 and have invested USD 330 million as 
of August 2006.  France's interest in the Turkish economy is 
significant, and a boycott could mean lost jobs and wages for 
thousands of Turkish workers.  It will be difficult, if not 
impossible, for a boycott of French products not to hurt Turks, such 
as Total gas station franchisees, or the workers at the Renault 
plants in Turkey.  We believe that this crisis will quickly die down 
if the matter is defeated in the Senate.  However, as the debate 
over the proposed legislation continues in Paris, we expect 
escalated rhetoric by public officials and business leaders, and 
continued demonstrations and sporadic attacks against French 
businesses in Turkey.  If the legislation passes the French Senate, 
we anticipate a severe political retaliation from the GOT.  End 
comment. 
WILSON