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DE RUEHAK #1922/01 2080703
ZNR UUUUU ZZH
P 270703Z JUL 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC PRIORITY 3155
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
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RUEKJCS/JOINT STAFF WASHDC//J-3/J-5//
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RUEUITH/ODC ANKARA TU//TCH//
RUEKJCS/SECDEF WASHDC
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RUEHAK/TSR ANKARA TU
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UNCLAS SECTION 01 OF 03 ANKARA 001922 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINS PTER ECON ENRG OREP IZ TU
SUBJECT: TURKEY SCENESETTER FOR AMERICAN-TURKISH COUNCIL 
STAFFDEL, AUGUST 3-9, 2007 
 
¶1. (SBU) Summary: Turkey's ruling Justice and Development 
Party (AKP) scored a significant victory in the July 22 
election and appears set to form another single-party 
government with a mandate to pursue its economic and 
political reform policies.  On Iraq, Turkey continues to be 
an essential partner, supporting coalition forces by allowing 
use of its territory as 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 
does not act.  A U.S. Congressional Armenian genocide 
resolution would likely work against those in Turkey calling 
for a collaborate 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 TURKEY 
 
¶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) 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. 
 
ELECTION RESULTS 
 
¶3. (U) Unofficial results indicate that Turkey's ruling AKP 
scored a significant victory in July 22 parliamentary 
elections, 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 by July 26, 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 that stressed unity, democracy, 
stability.  His first real test will be choosing a 
presidential candidate who can bridge the divide between a 
shattered left and jubilant AKP supporters. 
 
IRAQ/PKK 
 
¶5. (SBU) For over 22 years, the PKK has conducted a terrorist 
campaign that 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; 
 
ANKARA 00001922  002 OF 003 
 
 
spear-heading 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. 
 
¶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.  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. 
 
¶7. (SBU) Turkey's agreement to 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. 
 
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 Nikolas Sarkozy's preference of a 
"privileged partnership" vice full membership.  AKP, as 
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 establishing commissions of 
academics and historians from Turkey and Armenia to establish 
the facts, in parallel with efforts to reestablish official 
bilateral relations.  The January 2007 murder of Turkish 
Armenian journalist Hrant Dink has contributed to 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 
 
ANKARA 00001922  003 OF 003 
 
 
likely intensify, increasing the threat level for U.S. 
citizens and USG personnel living and working in Turkey. 
 
MACRO-ECONOMIC PICTURE 
 
¶11. (SBU) 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 201 to 45% in 2001.   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 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 Bosphorus 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. 
 
TRADE 
 
¶13. (SBU) With two-way bilateral trade around $10 billion, 
roughly in balance between exports and imports, the U.S. is 
an important trading partner for Turkey.  About half of 
Turkey's trade is with the EU, however, and Turkish trade 
with the Middle East, African and Former Soviet Union 
countries is growing.  As Turkey's total trade volume -- both 
exports and imports -- grows, the U.S. share in Turkey's 
trade is declining. 
 
¶14. (SBU) Deepening bilateral economic and business ties is a 
key priority of the Shared Vision and Structured Dialogue 
announced by Secretary Rice and Foreign Minister Gul in July 
¶2006.  To help catalyze closer economic ties, the U.S. and 
Turkey held a meeting of the bilateral Economic Partnership 
Commission (EPC) in February, 2007, co-chaired by he Under 
Secretary of the Turkish Foreign Ministry and State 
 
SIPDIS 
Department Assistant Secretary for Economic, Energy and 
Business Affairs Daniel Sullivan.  The EPC laid out an action 
plan that both sides are working to implement. 
 
Visit Ankara's Classified Web Site at 
http://www.state.sgov.gov/p/eur/ankara/ 
 
WILSON