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Dianne Wampler  10/27/2006 09:57:10 AM  From  DB/Inbox:  Dianne Wampler

Cable 
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UNCLAS    SENSITIVE     ANKARA 06122

SIPDIS
CX:
    ACTION: ECON
    INFO:   RAO FAS MGT PMA FCS POL DCM AMB CONS PA

DISSEMINATION: ECON /1
CHARGE: PROG

APPROVED: ECON:TGOLDBERGER
DRAFTED: ECON:TGOLDBERGER
CLEARED: NONE

VZCZCAYI867
RR RUEHC RUEHXK RUCNCIS RUEHSF RUEHBM RUEHTH
RUCPDOC
DE RUEHAK #6122/01 2991458
ZNR UUUUU ZZH
R 261458Z OCT 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 9624
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHSF/AMEMBASSY SOFIA 1087
RUEHBM/AMEMBASSY BUCHAREST 0918
RUEHTH/AMEMBASSY ATHENS 7542
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 ANKARA 006122 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR ITA/MAC/CHERIE RUSNAK 
USTR FOR LISA ERRION 
 
E.O. 12958: N/A 
TAGS: ETRD ECON BEXP PREL TU
SUBJECT:  TURKISH REGIONAL ECONOMIC INTEGRATION IDEAS 
 
REF:  ANKARA 5781 
 
SENSITIVE BUT UNCLASSIFIED. 
 
¶1.  (SBU)  Guven Sak, the multitasking guru behind the 
Turkish-Israeli-Palestinian effort to develop the Erez Industrial 
Zone in northern Gaza, is widening his sights to new areas for 
economic and business cooperation between Turkey and its less 
developed neighbors.  Backed by TOBB, the powerful national business 
federation, Sak is brainstorming ideas for integrating Turkey's 
economy with Mediterranean and Gulf states through an expanded "QIZ" 
initiative, with the Black Sea littoral through the Black Sea 
Economic Cooperation (BSEC) Business Council, and with the Caucasus 
and Central Asia in cooperation with the U.S. Chamber of Commerce's 
new Eurasia Business Platform.  Sak argues that regional integration 
contributes to Turkey's economic stability and that good ties with 
its often troubled neighbors will make Turkey a more attractive 
partner for EU membership.  On October 19, Sak outlined for us the 
various initiatives that he and his team at the Ankara-based 
Economic Policy Research Institute (www.tepav.org.tr) are developing 
in cooperation with TOBB's new "University of Economics and 
Technology."  He sees economic cooperation with the United States as 
playing an important role in moving all of these initiatives 
forward. 
 
----------------------------- 
Not Giving Up on Erez Project 
----------------------------- 
 
¶2.  (SBU)  Back from a September visit to Tel Aviv, Gaza and 
Jerusalem -- his third this year -- Sak remains convinced of the 
potential of TOBB's Erez initiative to provide jobs and income for 
Gazans.  Sak said he was well received by Israeli officials at high 
levels.  In what he said was a new development since the war with 
Hizballah, Sak found them interested in mechanisms for fostering 
economic and institutional development in Gaza and the West Bank. 
This was particularly true meeting with Defense Ministry officials 
to discuss security arrangements for the Erez crossing.  At the same 
time, he lamented that some officials, notably in the Finance 
Minisry, did not understand that encouraging Palestinian development 
meant streamlining complex tax transfer arrangements and providing 
other incentives for Palestinian areas, even if such measures are 
not available within Israel. 
 
¶3.  (SBU)  Sak said the next step is for the Palestinian Chamber to 
decide to attend the next "Ankara Forum" (the TOBB-sponsored 
grouping of Israeli, Palestinian, and Turkish business associations) 
scheduled for November in Tel Aviv.  Sak said this required 
political courage and President Abbas's support, which was not yet 
there.  He also volunteered that stronger leadership was needed in 
the Palestinian Chamber, saying he had heard that former economy 
minister Mazen Sinokrot would be a good advocate for Palestinian 
business interest in peace and job creation.  Sak said U.S. support 
could be helpful in encouraging Israel to include the Erez crossing 
in new security arrangements for Gaza crossings. 
 
----------------- 
A New QIZ Concept 
----------------- 
 
¶4.  (SBU)  But TOBB's Erez scheme is just a start.  During a June 
trip, Sak stopped in Amman to visit the Tajammouat QIZ, where he met 
zone managers and a Turkish investor and got a better idea of the 
challenges of the QIZ program, especially meeting the 35% local plus 
Israeli value-added requirement for products to enter the United 
States duty-free.  Sak said he is looking for ways to encourage 
Turkish trade and investment with the Arab world.  He thought that 
U.S. duty and quota free access for goods produced in regional 
Turkish-sponsored "Special Economic Zones" on the Erez model could 
be such an incentive.  Analogously to the QIZ program, which is 
limited to joint production with Israeli companies, Sak suggested 
that local content from countries with which the U.S. has FTA's 
could be cumulated with Turkish and U.S. content in such zones so as 
to meet more easily the 35% value-added duty free requirement.  He 
thought this would overcome the challenge of turning new U.S. FTA's 
into the viable export and job generators and would encourage 
Turkish investment and technology and management transfer to the 
region.  Sak said he was working on a proposal that he hoped to 
share with the Turkish MFA before the next meeting of the 
U.S.-Turkey Economic Partnership Commission. 
 
------------------------------ 
Black Sea Business Cooperation 
------------------------------ 
 
¶5.  (SBU)  An MFA official told us recently that even if Black Sea 
Economic Cooperation (BSEC) was not producing much in the way of new 
initiatives, at least it was obliging neighbors like Armenia, 
Azerbaijan, Greece, and Turkey to sit in the same room and talk to 
each other.  Sak said that's not enough.  He is working with the 
BSEC Secretariat on ideas to activate and strengthen the BSEC 
Business Council, looking to APEC's Business Council as a model.  As 
a first step, he said Turkey will encourage the creation of a 
"registry" of companies doing business in the region.  This would 
help, he hoped, create new business-to-business ties and foster a 
stronger business constituency for shared interests in the region. 
He is discussing this with Turkish officials in the run-up to 
Turkey's rotational BSEC leadership next year. 
 
--------------------------------------- 
Excited About Caucasus and Central Asia 
--------------------------------------- 
 
¶6.  (SBU)  Sak is looking forward to participating in a November 14 
meeting in Istanbul of AmChams from Turkey, the Caucusus and Central 
Asia organized by the U.S. Chamber of Commerce's new "Eurasia 
Business Platform."  He said TOBB and Turkish companies are already 
very active in this region and that there are diverse opportunities 
for cooperation with U.S. companies.  Like the U.S. Chamber, which 
recently published a study of regional transportation logistics, Sak 
thinks development of regional trade networks is key to the region's 
development.  He understood that USAID and the EU were working on 
trade facilitation projects, and said TOBB is working with its 
counterpart Kazakh business organization to develop a proposal for a 
privately-managed border crossing.  This model, which works on a BOT 
basis, has worked in Turkey as a tool for streamlining border 
procedures and strengthening incentives to boost cross border trade 
flows.  On a longer-term track, Sak is studying potential land 
routes between Turkey and the east that avoid Russian and Iranian 
territory using trans-Caspian ferries. 
 
--------------------------------------------- -- 
Opportunities for Regional Economic Discussions 
--------------------------------------------- -- 
 
¶7.  (SBU)  Relieved of responsibilities as the public member of the 
Monetary Policy Council and having turned over ERPI's programs on 
domestic economic reform to former Central Bank Governor 
Serdengecti, Sak is able to give his full time attention to regional 
integration schemes.  He thinks big, but also in concrete, practical 
steps.  Turkey's economic dynamism and its advanced business sectors 
are creating new opportunities for Turkish companies to contribute 
to regional economic stability and growth.  Sak's ideas about 
fostering trade and investment networks are a welcome alternative to 
Turkey's traditional mercantilist approach, as epitomized by Trade 
Minister Tuzmen's "neighbors policy."  Sak sees economic cooperation 
with the U.S. Government and companies as prerequisites to the 
success of these initiatives, which should provide grist for a 
regional discussion within the U.S.- Turkey Economic Partnership 
Commission. 
WILSON