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O 241344Z NOV 06
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0060
INFO RUCNRAQ/IRAQ COLLECTIVE IMMEDIATE

UNCLAS SECTION 01 OF 03 ANKARA 006500 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PTER ETRD PGOV TU IZ IR LE SY AM EUN
SUBJECT: Scenesetter for CODEL Shays' Nov. 27-29 Visit to Turkey 
 
(U) Sensitive but unclassified - please protect accordingly. 
 
¶1. (SBU) Summary: Turkey broadly agrees with U.S. goals in Iraq and 
tangibly supports our military effort there.  However, Turkish 
concerns about Iraq's stability and future, as well as the PKK 
issue, complicate the relationship.  Turkey has generally good 
intentions in promoting Middle East peace, though it has made 
occasional missteps such as meeting with Hamas.  Progress on 
Turkey's EU bid is endangered by the Cyprus issue.  There is rising 
concern here that the U.S. Congress will approve an Armenian 
genocide resolution for the first time in 2007.  This would have a 
deleterious effect on our relations, and could endanger support 
Turkey provides for our efforts in Iraq.  End summary. 
 
Iraq: An Uncomfortable Partnership 
---------------------------------- 
 
¶2. (SBU) Turkey shares the U.S. goal of a unified, democratic Iraq 
that is secure within its borders.  While Kurdish aspirations and 
the PKK presence in northern Iraq remain a significant concern, the 
government is contributing to efforts to ensure the success of the 
country as a whole.  The GOT vocally supported the participation of 
all ethnic and religious groups in the elections and the conference 
of 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 extensive training to over 300 Iraqi diplomats and 
political party members, and spearheaded a "neighbors meeting" 
process which has helped Iraqi government leaders interact with 
their regional counterparts. 
 
¶3. (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 Gate.  Since Turkey approved the use of Incirlik Air 
Base as a cargo hub to support coalition operation 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 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. 
 
¶4. (SBU) Turkey has been frustrated, however, by events in Iraq. 
Many here are concerned by the inability of the GOI to contain 
sectarian violence.  Iranian influence and Kurdish designs on Kirkuk 
and other areas south of the green line have led Turks to fear the 
disintegration of the country and the establishment of an 
independent Kurdish state.  This would be a significant negative 
development for Turkey and could threaten security in this volatile 
region. 
 
Opportunities and Challenges in Economic Ties 
--------------------------------------------- 
 
¶5. (SBU) Turkey's private sector could play a major role in ensuring 
Iraq's economic success.  Turkish-Iraqi trade volume was $ 3.2 
billion in 2005.  Of this, $ 2.7 billion was exports from Turkey to 
Iraq, a nearly four-fold increase from 2003 levels.  Turkish 
companies and the GOT are keenly interested in developing 
hydrocarbon reserves, especially natural gas, in the north for 
export to Turkey and Europe. 
 
¶6. (SBU) Turkish companies in Iraq have been successful, but they 
have also faced significant challenges.  Insurgents have killed over 
100 Turkish truckers and other contractors, chiefly in 2004-2005. 
Some companies who have subcontracted to major U.S. firms such as 
KBR and Fluor have complained to us of significant payment delays. 
 
¶7. (U) Turkey exports 270 MW of electricity to northern Iraq.  Both 
countries aim to increase electricity exports from Turkey to 1,000 
MW, 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 undisbursed for security reasons. 
 
PKK Issue Complicates Turkish Cooperation 
----------------------------------------- 
 
¶8. (SBU) Since the inception in the mid 1980s of the Kurdish 
separatist terrorist organization PKK's violent campaign in Turkey, 
over 35,000 Turks have been killed.  The organization called off its 
unilateral cease-fire in 2004, and uses its safe haven in northern 
Iraq to train for and plan attacks against Turkish security forces, 
civilians, and foreign tourists.  Over 600 have died so far in 2006. 
 When Turkey threatened to carry out cross-border operations into 
northern Iraq in the summer of 2006, the Iraqi Government agreed to 
 
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take steps to limit the PKK's freedom of action.  The USG appointed 
Special Envoy Gen. (r) Joseph Ralston to work with Turkey and Iraq - 
and within the USG interagency - on steps to counter the PKK. 
 
¶9. (SBU) Following Gen. Ralston's appointment and his meetings with 
senior leaders in both countries, Iraqi PM Maliki issued a statement 
asserting that organizations such as the PKK have no place in Iraq, 
and Iraqi Kurdish leaders persuaded the PKK to declare a unilateral 
cease-fire on Oct. 1. 
 
¶10. (SBU) Turkish officials have dismissed the cease-fire and called 
on the PKK to permanently lay down its arms, renounce violence, and 
surrender to Turkish authorities.  PKK terrorist attacks in Turkey 
have slowed since the cease-fire commenced, but have not stopped 
altogether.  PKK activity during the harsh winter months in 
southeast Turkey is generally low anyway, and the press reports that 
jailed PKK leader Abdullah Ocalan has given the GOT a deadline of 
mid-May 2007 to take certain unspecified steps to reach out Turkey's 
Kurds. 
 
¶11. (SBU) GOT officials are skeptical of Iraq's latest steps to 
contain the PKK and are equally skeptical of the cease-fire 
announcement.  Iraqi Kurdish leaders seem to place the onus of the 
PKK problem squarely on Turkey, claiming that all Turkey needs to do 
is give PKK members full amnesty and provide more rights for its 
Kurdish populations.  On his Nov. 16-17 visit PM Maliki assured 
Turkish leaders that he took the PKK issue seriously, but offered 
few tangible specifics. 
 
¶12. (SBU) Turkey is willing to give Ralston a chance to achieve 
concrete results, but ultimately it expects the U.S. and/or the 
Iraqis to deal with the PKK's continued presence in Iraq.  Failing 
this, and should attacks intensify once again in the spring, 
pressure will mount for Turkey to act unilaterally. 
 
Regional Diplomacy 
------------------ 
 
¶13. (SBU) Given its shared historical, cultural and religious ties 
with countries in the region, as well as 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 hard 
in recent years to re-establish relations with Iran and Syria both 
to bolster its fight against the PKK, which has a presence in those 
countries, and to strengthen its economic ties.  It also believes 
that, as the only Muslim country that has good relations with both 
Israel and the Palestinians, it can play a special role in the peace 
process.  Despite Western disapproval, Foreign Minister Gul welcomed 
a Hamas delegation to Ankara, and the PM and FM continue to engage 
the Iranian and Syrian governments.  In all cases, they tell us they 
are sending the right messages in private. 
 
¶14. (SBU) Turkey was highly critical of Israel's response in July 
against Hizbullah attacks emanating from Lebanon.  However, Turkey 
responded immediately to the humanitarian crisis by opening its 
ports for the transit of evacuees, including of 1,700 Americans who 
transited Incirlik Air Base.  Turkey has deployed 900 troops, a 
frigate and a personnel transport ship to support the UN 
peacekeeping operation there -- despite domestic opposition -- and 
has opened its sea and airport for the maintenance of UNIFIL 
equipment and the transit of troops to UNIFIL.  The GOT has been in 
full agreement with our goal of supporting the Siniora government. 
 
¶15. (SBU) The MFA, military and many in the ruling Justice and 
Development (AK) Party 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, but is willing to consult with us 
on targeted financial sanctions.  The government's public statements 
-- which we are told match what they say in private -- on Iran's 
nuclear program have significantly strengthened since Iran resumed 
uranium enrichment.  You may want to welcome these statements and to 
encourage a continued strong message. 
 
Turkey/EU/Cyprus: Rough Seas 
---------------------------- 
 
¶16. (U) Turkey's EU accession process, never smooth, is potentially 
heading into rough seas.  The issue is the extension of Turkey's 
pre-existing Customs Union with the EU to all new EU members, 
including the Republic of Cyprus (ROC) which Turkey does not 
officially recognize.  The Turks have a legal obligation to open at 
least some ports and airports to GOC shipping/goods by early to mid 
December.  The Turkish government has steadfastly said it cannot do 
so unless the isolation of the Turkish Cypriots (TCs) is lifted. 
The GOT believes the EU made a commitment to open up trade with TCs 
following their "yes" vote on the Annan Plan referendum in April 
2004 which it has yet to live up to.  If no compromise solution can 
be found, the December European Council likely will decide to 
suspend a number of trade-related Acquis chapters.  It remains to be 
 
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seen how serious the Turkey-EU rupture will be.  The USG strongly 
supports Turkey's EU vocation as good for both Turkey and Europe. 
 
Armenian Genocide Resolution and U.S.-Turkey Relations 
--------------------------------------------- --------- 
 
¶17. (U) In the immediate aftermath of the U.S. midterm election, 
Turks started to raise with Embassy officials questions regarding 
the possibility of a sense of the Congress resolution recognizing 
the Armenian Genocide.  This remains a neuralgic issue in Turkey. 
When a similar resolution nearly made it to the House floor in 
November 2000, when U.S.-Turkish relations were on excellent 
footing, their Ambassador had his bags packed, ready to leave; other 
sanctions were under consideration.  When the lower house of the 
French parliament passed a law in October that would criminalize 
denial of an Armenian Genocide, reaction in Ankara was strong, 
though measured.  While the bill has yet to become law, 
Turkish-French bilateral mil-mil relations are currently frozen and 
trade has suffered. 
 
¶18. (SBU) We believe reaction to a U.S. Congressional resolution 
would be considerably stronger.  In an election year -- 2007 
features both presidential and parliamentary elections in Turkey -- 
with nationalist feelings running high, reaction likely would be 
swift and retaliatory, despite our efforts over the past 18 months 
to put our bilateral relationship back on even footing.  Examples of 
actions that would damage our regional priorities: We could be 
denied use of Incirlik Air Base, which currently serves as a hub to 
move close to 60% of air cargo to Coalition forces in Iraq.  Habur 
Gate on the Turkey-Iraq border is also a key transit point for 
sustainment fuel for our troops, as well as for Iraq in general. 
Any slowdown or cut-off there would hurt U.S. warfighters in Iraq. 
 
Economic Snapshot 
----------------- 
 
¶19. (SBU) The AK Party government has implemented key 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 an $ 10 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. 
 
¶20. (SBU) Yet, despite these achievements, the current account 
deficit is large (7-8% 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, and 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, allowed the 
economy to weather the turbulence and markets have nearly returned 
to their pre-May levels. 
 
WILSON