VZCZCXYZ0038
OO RUEHWEB

DE RUEHAK #1890/01 2051358
ZNR UUUUU ZZH
O 241358Z JUL 07
FM AMEMBASSY ANKARA
TO RUEHEG/AMEMBASSY CAIRO IMMEDIATE 0431
INFO RUEHGB/AMEMBASSY BAGHDAD 1002
RUEHIT/AMCONSUL ISTANBUL 3062
RHEFDIA/DIA WASHDC
RUEHC/SECSTATE WASHDC 3108
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RHMFIUU/HQ USEUCOM VAIHINGEN GE
RUEKJCS/JOINT STAFF WASHDC//J-3/J-5//
RUEUITH/ODC ANKARA TU
RUEKJCS/SECDEF WASHDC//USDP:PDUSDP/ISA:EUR/ISA:NESA/DSCA//
RUEHAK/USDAO ANKARA TU
RUEHNO/USMISSION USNATO 5838

UNCLAS ANKARA 001890 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
CAIRO FOR ECPO GREG LOGERFO, PLEASE PASS TO STAFFDEL GROVE 
 
E.O. 12958: N/A 
TAGS: PGOV PINS PTER ECON ENRG OREP IZ TU
SUBJECT: TURKEY SCENESETTER FOR STAFFDEL GROVE, JULY 25-28, 
2007 
 
¶1. (SBU) Summary:  Turkey's ruling Justice and Development 
Party (AKP) scored a significant victory in Sunday's polls 
and appears set to form another single-party government with 
a mandate to pursue its economic reform policies.  On Iraq, 
Turkey continues to be an essential partner, supporting 
coalition forces by allowing use of its territory as a 
logistical hub.  The single biggest obstacle to bilateral 
relations is PKK terrorism.  Turkey has repeatedly expressed 
impatience at the lack of U.S. action against PKK terrorists 
in northern Iraq and has threatened to strike at PKK targets 
across the border if the U.S. or Iraq do not act.  A U.S. 
Congressional Armenian genocide resolution would likely work 
against those in Turkey calling for a collaborative look at 
1915 events, jeopardize U.S. national security interests in 
Turkey and Iraq, and complicate the security environment for 
U.S. citizens and USG personnel.  Turkey's economy has 
achieved five years of GDP growth averaging over 7% -- the 
highest rate of any OECD country.  Because of its strategic 
location, Turkey aspires to increase its role as an energy 
transit country by piping natural gas to meet Europe's 
growing needs, and will soon begin transporting gas from 
Azerbaijan to Greece.  End summary 
 
MISSION SUMMARY 
 
¶2. (SBU) Mission Turkey consists of four posts:  Embassy 
Ankara, Consulate General Istanbul, Consulate Adana, and a 
two-person Consular Agency in Izmir.  Country-wide, there are 
currently about 300 American positions and almost 700 locally 
employed staff (LES) members working for over 20 agencies 
throughout the Mission.  The Mission's FY 2007 operating 
budget was $30 million.  Mission Turkey is scheduled for a 
New Embassy Compound (NEC), with construction set to begin in 
¶2010.  We are now working to identify a property for the NEC 
site that is both centrally located and affordable. 
 
ELECTION RESULTS 
 
¶3. (U) In the July 22 parliamentary elections, unofficial 
results indicate that Turkey's ruling AKP scored a 
significant victory, returning to power with 46% of the vote, 
up from 34% in the 2002 election.  Two other parties crossed 
the ten percent election threshold required to enter 
parliament, along with 27 independent candidates, creating a 
fractious if more representative legislature.  AKP appears 
set to form another single-party government, with around 340 
of parliament's 550 seats, but returns with a reduced 
majority and short of the 367 seats needed to elect the next 
president or amend Turkey's military-drafted constitution. 
The opposition CHP, with 20% of the vote, lost seats in 
several of its strongholds. Commentators view the results as 
the opposition's failure as much as AKP's success.  Official 
results are expected within days, barring major challenges. 
The new parliament will convene five days after final results 
are announced; election of a Speaker, formation of a new 
government, and election of Turkey's next president will top 
the agenda. 
 
¶4. (U) AKP now has a mandate to pursue its economic 
development and modernization policies, EU membership and 
political reform for another term.  Erdogan was magnanimous 
in an acceptance speech which stressed unity, democracy, and 
stability.  His first real test will be choosing a 
presidential candidate who can bridge the divide between a 
shattered left and jubilant AKP supporters.  Turkey's 
elections were a clear showing of the strength and increasing 
maturity of Turkey's democracy. 
 
IRAQ/PKK 
 
¶5.  (SBU)  For over 22 years, the PKK has conducted terrorism 
against the Turkish government which has resulted in the 
deaths of about 37,000 Turks.  Since the end of its 
self-imposed five-year cease-fire in 2004, the PKK has 
conducted attacks against Turkey from strongholds in northern 
Iraq, killing over 600 Turkish civilians and military and 
foreigners in 2006 alone, and nearly 100 in 2007.  The 
increased violence prompted the government and military to 
 
warn of possible cross-border operations into Iraq.  The USG 
has strongly discouraged this, citing Iraqi sovereignty and 
the risk of increased instability.  The United States has 
been Turkey,s closest ally in the fight against the PKK, 
securing EU agreement to place the PKK on its list of 
terrorist organizations; spear-heading a Europe-wide effort 
to close PKK financial, logistical, and media support outlets 
there; and leading a trilateral (US/TU/IZ) process to stop 
the threat emanating from northern Iraq.  In August 2006, the 
U.S. appointed Gen (ret) Joseph Ralston as Special Envoy to 
Counter the PKK to head-up a renewed trilateral process. 
 
¶6. (SBU) Iraq remains a major concern for Turkey.  Turkey 
worries about increasing instability in Iraq, growing Iranian 
influence in the region, and the potential for Iraq to 
splinter along sectarian or ethnic lines.  The GOT is also 
concerned about Iraqi Kurdish ambitions to expand their 
territory to include oil-rich Kirkuk.  The prospect of a 
referendum later this year on the future status of Kirkuk 
exacerbates Turkish fears that a Kurdish annexation of the 
province will lead to massive inter-communal violence, and, 
ultimately, the dissolution of the country.  Transfer of the 
control of Kirkuk to the Kurdish Regional Government also 
sparks fears of the creation of an independent Kurdish state. 
 Turkish political leaders have sought to reinforce Iraq's 
unity and territorial integrity, and have been among the most 
active of Iraq's neighbors in the Iraq Neighbors Process. 
Turkey hosted a meeting of the energy working group in June 
and hopes to host ministers in September in Istanbul. 
 
¶7. (SBU) Turkey,s agreement to allow the use of its 
territory as a logistical hub has been a combat multiplier 
for our Iraq operations.  Approximately 3 million gallons per 
day of gasoline and diesel fuel for the Iraqi people and 25% 
of sustainment fuel for coalition forces crosses into Iraq 
through the Ground Line of Communication at Habur Border 
Gate.  Since May 2005, when Turkey approved the use of 
Incirlik Air Base as a cargo hub to support coalition 
operations in Iraq, over 152 million pounds of equipment have 
been shipped to U.S. troops.  Over 50% of all air cargo into 
Iraq has transited the Incirlik cargo hub.  Six C-17 aircraft 
now deliver from Incirlik the amount of supplies it 
originally took 9-10 planes to deliver from Germany, saving 
over $160 million per year in transportation costs.  Up to 
ten KC-135 tanker aircraft have been based at Incirlik since 
2003 to support refueling operations in support of Operation 
Enduring Freedom and Operation Iraqi Freedom, running over 
2800 refueling sorties and delivered over 192 million pounds 
of fuel. Turkey has four personnel assigned to NTM-I in Iraq 
and has trained 57 Iraqi military officers in Turkey. 
 
EU ACCESSION 
 
¶8. (U)  A double-election year contributed to the GOT,s 
failure to enact reform on several high-profile political 
issues, such as Turkish Penal Code Article 301 (insulting 
"Turkishness"), even while technical-level EU harmonization 
continued.  The EU,s June 26 decision to open negotiations 
on two chapters (Statistics and Financial Control) but not an 
expected third (Economic and Monetary Union) left Turkish 
officials frustrated and concerned that the EU,s December 
annual progress report could recommend suspension of 
additional chapters.  The Turkish public, meanwhile, has 
grown increasingly skeptical of the EU venture, in large part 
as a reaction to Euro-skepticism of Turkey, reflected most 
notably by French President Sarkozy,s preference of a 
"privileged partnership" vice full membership.  AKP, 
historically the party most committed to Turkey,s EU 
membership, now has the chance to use its electoral mandate 
to breathe new life into the process. 
 
HOUSE RESOLUTION ON ARMENIAN GENOCIDE 
 
¶9. (SBU)  The USG has worked hard to encourage a candid 
discussion in Turkey of the tragedy suffered by ethnic 
Armenians during World War I.  The Turkish and Armenian 
governments have discussed commissions of academics and 
historians from Turkey and Armenia to ascertain the facts, in 
 
parallel with efforts to reestablish official bilateral 
relations.  The January 2007 murder of Turkish Armenian 
journalist Hrant Dink has contributed to a new openness, with 
growing calls for changes to Penal Code Article 301, which 
criminalizes "insulting Turkishness," and stifles Turks, 
ability to discuss fully the events of 1915.  A U.S. 
Congressional resolution labeling this tragedy a "genocide" 
would trigger an intensely negative and nationalist response, 
and would work against those voices in Turkey that are 
calling for a comprehensive exploration of these events and 
for normalizing bilateral relations with Armenia. 
 
¶10. (SBU) A resolution would also have negative consequences 
for U.S. national security interests in Iraq and elsewhere. 
Supply routes into Iraq that are crucial to supporting U.S. 
troops, military overflights, and use of Turkish bases that 
support U.S. military operations in Iraq and Afghanistan 
could be jeopardized.  Additionally, major defense 
procurement contracts with U.S. manufacturers (with expected 
and potential sales exceeding $10 billion) could be scrapped. 
 Agricultural purchases might also be canceled and consumer 
boycotts could ensue.  Anti-Americanism in Turkey would 
likely intensify, increasing the threat level for U.S. 
citizens and USG personnel living and working in Turkey. 
 
MACRO-ECONOMIC PICTURE 
 
¶11. (U) The Turkish economy has recovered strongly from the 
2001 financial crisis, having achieved five years of GDP 
growth averaging over 7% -- the highest rate of any OECD 
country. In dollar terms, per capita GDP doubled to $5,482 in 
¶2006.  Since 2004, for the first time since the early 1970's, 
inflation has been in single digits.   At the same time, 
Turkey has stabilized its economy and reduced its 
vulnerability to financial problems, with net public sector 
debt to GDP falling from 90% in 2001 to 45% in 2006.   Turkey 
achieved this through its IMF-sponsored economic program, 
including a 6.5% primary surplus target for the public sector 
and orthodox, pro-investor, pro-market policies.   Despite 
this improved situation Turkey remains somewhat vulnerable if 
global emerging market sentiment turns negative because of 
Turkey's large current account deficit (8% of GDP in 2006), 
the public sector's continued reliance on foreign portfolio 
investors rolling over mostly short-term debt, and risks of 
political or regional instability. 
 
ENERGY ISSUES 
 
¶12. (U) Turkey imports nearly all of its oil and natural gas. 
However, Turkey's strategic location, in-between Europe and 
the Middle East and Caspian regions, makes Turkey an 
important energy transit country. More than 3 million bbl of 
Caspian oil pass every day through the Bosporus Straits, and 
nearly 1 million bbl/d of oil pass through the 
Baku-Tbilisi-Ceyhan (BTC) pipeline, the first transitional 
pipeline for Caspian oil that does not cross Russian soil. 
Turkey aspires to increase its role as an energy transit 
country by piping natural gas to meet Europe's growing needs, 
and will soon begin transporting gas from Azerbaijan to 
Greece, the first time Europe will receive Caspian gas by a 
non-Russian route. Turkey also aspires to construct the 
larger Nabucco pipeline to deliver natural gas across Turkey 
to Austria. The USG supports Nabucco, but only if filled with 
non-Iranian gas from Azerbaijan, Turkmenistan, Kazakhstan and 
possibly Iraq.  Russia's recent announcements, reinforcing 
its hold on Turkmen gas and bypassing Turkey to sell gas to 
Italy, spurred Turkey to announce a preliminary MOU with Iran 
on a future gas deal, which we have protested. 
 
Visit Ankara's Classified Web Site at 
http://www.state.sgov.gov/p/eur/ankara/ 
 
WILSON