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Dianne Wampler  02/02/2007 07:42:05 PM  From  DB/Inbox:  Dianne Wampler

Cable 
Text:                                                                      
                                                                           
      
UNCLAS    SENSITIVE     ANKARA 00220

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

DISSEMINATION: ECON /1
CHARGE: PROG

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

VZCZCAYI744
RR RUEHC RUEHIT RUEHTV RUEHJM RUEHDA RUEHEG
DE RUEHAK #0220 0330616
ZNR UUUUU ZZH
R 020616Z FEB 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 0811
INFO RUEHIT/AMCONSUL ISTANBUL 2043
RUEHTV/AMEMBASSY TEL AVIV 0120
RUEHJM/AMCONSUL JERUSALEM 0287
RUEHDA/AMCONSUL ADANA 1611
RUEHEG/AMEMBASSY CAIRO 0365

UNCLAS ANKARA 000220 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR NED SAUMS AND LISA ERRION 
EB FOR DAS MOORE 
 
E.O. 12958: N/A 
TAGS: ETRD EAID PREL TU
SUBJECT:  TURKISH BUSINESS ECOURAGED ON GAZA PROJECT 
 
REF:  A) 2006 JERUSALEM 495, B) 2006 ANKARA 264 
 
SENSITIVE BUT UNCLASSIFIED. 
 
¶1.  (SBU)  Summary.  Turkish business officials say they had 
productive meetings in Israel in mid-January about their proposed 
development of the Erez Industrial Zone in Gaza.  Israeli officials 
said they would start work on special tax and security arrangements 
for the zone, with the MOD taking the lead working with other GOI 
agencies.  Palestinians are supportive in principle but have yet to 
approve a concession agreement or identify potential investors. 
During February 8-9 U.S.-Turkey economic meetings, Turkish business 
officials will propose that the U.S. support the initiative by 
providing special trade treatment for goods produced in Erez with 
Turkish content.  End Summary. 
 
¶2.  (SBU)  Guven Sak, who is overseeing the Turkish business 
federation TOBB's efforts to revitalize the Erez Industrial Zone in 
Gaza, said his mid-January visit to Tel Aviv with TOBB Chairman 
Rifat Hisarciklioglu was very productive.  Hisarciklioglu went to 
Israel for the third meeting of the "Ankara Forum" of Turkish, 
Israeli and Palestinian chambers of industry.  In addition to the 
Forum meetings, he met DPM Peres and President Abbas, both of whom 
reiterated their support for the project. 
 
MOD to Coordinate Tax and Security Arrangement 
--------------------------------------------- - 
 
¶3.  (SBU)  Sak stayed on for meetings with the Ministry of Defense 
about security and tax arrangements for the zone and also met Lt. 
General Dayton regarding security arrangements.  He said the 
meetings at MOD included Deputy Minister Ephraim Sneh as well as 
Customs, Finance Ministry, and border authority officials.  (Only 
the IDF was not there, he said.)  They agreed that MOD would 
coordinate preparation of an MOU that covers arrangements for entry 
and exit from the zone of workers and trucks and for expedited 
reimbursement of tax payments collected by Israel.  He also 
appreciated what he said was General Dayton's willingness to help 
implement security provided by Palestinian Presidential Guards once 
an MOU is concluded.  (He was also very thankful for ConGen 
Jerusalem's help with the meeting.) 
 
MOD Agrees to Consider Damage Compensation 
------------------------------------------ 
 
¶4.  (SBU)  Another positive sign was Israeli officials' willingness 
to consider TOBB's request for compensation for damage done in the 
zone by the Israeli military in July (and subsequent looting by 
Palestinians), as well as for the additional cost of special 
security requirements created by Israel.  He said he was joined in 
his MOD meetings by Palestinian advisors, including former Industry 
Minister Mazen Sinokrot.  However, he acknowledged that the PA had 
not yet approved the concession agreement with TOBB. 
 
Looking for Asian and U.S. Investment 
------------------------------------- 
 
¶5.  (SBU)  During our February 1 meeting, Sak thought that he would 
be able to begin signing up investors once the tax and security 
arrangements are approved.  He was pessimistic about finding 
Palestinian businesspeople ready to invest, describing the 
disorganization and lack of focus he found at the Palestinian 
Investment Fund (PIF).  He will focus first on potential Asian 
investors, pitching the potential of the zone as a regional export 
platform in planned trips to Japan and China.  He would then 
approach U.S. investors, including investor groups like the "Chicago 
Ten" with which he has made contact. 
 
Request for U.S. Support 
------------------------ 
 
¶6.  (SBU)  Finally, Sak said that he and Hisarciklioglu would use 
February 8 business meetings of the U.S.-Turkey Economic Partnership 
Commission to describe the project as an example of Turkey's 
potential to contribute to economic growth and job creation in the 
region.  The U.S. could help, he said, by giving special treatment 
to exports to the U.S. of products made in Erez with Turkish input. 
He will propose that Turkish value-added count toward the 35% local 
content requirement for duty free entry under the U.S.-Israel FTA or 
the QIZ initiative.  They will also describe other potential Turkish 
contributions to trade facilitation and economic integration in 
Central Asia, such as drawing on TOBB's experience in building and 
operating customs facilities on Turkey's borders. 
WILSON