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OO RUEHLN
DE RUEHAK #2120/01 2281411
ZNR UUUUU ZZH
O 161411Z AUG 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3431
INFO RUEHHE/AMEMBASSY HELSINKI PRIORITY 0235
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RUEHMO/AMEMBASSY MOSCOW 5573
RUEHFR/AMEMBASSY PARIS 5415
RUEHRO/AMEMBASSY ROME 6675
RUEHWR/AMEMBASSY WARSAW 0249
RUEHFT/AMCONSUL FRANKFURT 4182
RUEHIT/AMCONSUL ISTANBUL 3182
RUEHLN/AMCONSUL ST PETERSBURG 0057

UNCLAS SECTION 01 OF 04 ANKARA 002120 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PLEASE PASS TO SENATOR SPECTER 
 
E.O. 12958: N/A 
TAGS: AM ECON ENRG IZ OREP PGOV PINS PTER TU
SUBJECT: TURKEY: SCENESETTER FOR CODEL SPECTER, AUGUST 
24-26, 2007 
 
REF: A. STATE 113788 
     ¶B. STATE 104534 
 
¶1. (SBU) Summary: The new parliament is in the midst of 
electing Turkey,s next president, following general 
elections in July.  The ruling Justice and Development Party 
(AKP) scored a significant victory, returning 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.  Senior 
officials are also concerned that a U.S. Congressional 
Armenian genocide resolution (AGR) could spark a negative 
response among the Turkish public, which would likely 
complicate the bilateral relationship, affect U.S. national 
security interests, and work against those seeking a 
collaborative approach to the events of 1915.  Turkey 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. 
 
NEW PARLIAMENT, NEW PRESIDENT 
 
¶2. (U) Turkey's new parliament is expected to elect the 
country's eleventh president on August 28, on the third round 
of voting.  FM Abdullah Gul formally declared his candidacy 
on August 14 and is widely expected to win.  It has been a 
contentious process, with many preferring a consensus 
candidate rather than Gul.  The new parliament convened on 
August 4 and MPs elected a widely respected moderate 
conservative as Speaker.  AKP,s strong showing in the July 
elections, with 46.6% of the vote, surprised many Turks.  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, with 341 of parliament's 550 seats, holds 
a reduced majority, short of the 367 seats needed to amend 
Turkey's military-drafted 1982 constitution.  The 
nominally-left opposition Republican People's Party (CHP), 
with 21% of the vote, lost a substantial number of seats (98, 
down from 152 in 2002), in part due to a third party, the 
right-wing Nationalist Action Party (MHP), entering 
parliament with 70 seats.  Twenty of the 27 independents are 
affiliated with the pro-Kurdish Democratic Society Party 
(DTP).  Commentators view the results as the opposition's 
failure as much as AKP's success, but the results gave AKP 
the opportunity to pursue its economic development and 
modernization policies, EU membership process and political 
reform for another term. 
 
IRAQ/PKK 
 
¶3. (SBU) For over 20 years, the PKK has conducted a terrorist 
campaign that has resulted in the deaths of over 35,000 
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 
Turks (civilians and military) and foreigners in 2006 alone, 
and over 100 so far 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 (U.S./Turkey/Iraq) process to stop the threat 
emanating from northern Iraq. 
 
¶4. (SBU) Iraq remains a major concern for Turkey.  Turkey 
 
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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. 
 
¶5. (SBU) Turkey's agreement to the use of its territory as a 
logistical hub has been a combat multiplier for our Iraq 
operations.  Approximately three 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 
 
¶6. (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 fall 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. 
 
JUDICIAL REFORM 
 
¶7. (U) Turkey continues work to harmonize and reform its 
judicial system in its bid to join the EU.  Turkey has 
improved the timeliness and efficiency of civil prosecutions, 
and developed more uniform sentencing guidelines in criminal 
cases.  In the last five years, Turkey created 21 
intellectual property courts in large cities countrywide for 
effective prosecution of IPR violators.  Another planned 
improvement is automation of all judiciary rulings for use by 
law enforcement agencies, prosecutors, and judges, which is 
scheduled for completion in 2008.  A key focus of the Embassy 
has been Turkey,s prosecution of terrorism financiers and 
adherence to United Nations Security Council Resolutions.  To 
that end, in 2006, the Department of Justice stationed a 
resident Regional Legal Adviser here.  The RLA works closely 
with Turkish judicial authorities to provide training and 
information.  The Embassy also works to increase European law 
enforcement focus on the PKK as an organized crime problem. 
For example, in January 2007, RLA hosted a roundtable for 
Turkish, French, Dutch, and British prosecutors to discuss 
methods to investigate and prosecute terrorist organizations, 
particularly the PKK. 
 
HOUSE RESOLUTION ON ARMENIAN GENOCIDE 
 
¶8. (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 joint experts 
commissions to establish the facts, in parallel with efforts 
to reestablish official bilateral relations.  Turkey,s 
public would react strongly to a Congressional resolution 
 
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labeling this tragedy a "genocide", which would also work 
against those calling for a comprehensive examination and 
normalized Turkish-Armenian relations. 
 
¶9. (SBU) A resolution would drive increased anti-Americanism, 
which could have a negative impact on U.S. national interests 
in Iraq and elsewhere.  Supply routes 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.  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, 
with a negative impact on U.S. citizens and USG personnel 
living and working in Turkey. 
 
MACRO-ECONOMIC PICTURE 
 
¶10. (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 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 to negative global market 
sentiment 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 
 
¶11. (U) Turkey imports nearly all of its oil and natural gas. 
However, Turkey's strategic location, between Europe and the 
Middle East and Caspian regions, makes Turkey an important 
energy transit country. More than three million bbl of 
Caspian oil pass every day through the Bosphorus Straits, and 
nearly one million bbl/d of oil pass through the 
Baku-Tbilisi-Ceyhan (BTC) pipeline, the first 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.  It will soon 
begin transporting gas from Azerbaijan to Greece -- the first 
time Europe will receive Caspian gas via 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 it is filled with non-Iranian 
gas from Azerbaijan, Turkmenistan, Kazakhstan and possibly 
Iraq.  Recent Russian announcements that reinforce its hold 
on Turkmen gas and bypass 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 
 
¶12. (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.  However, about half 
of Turkey's trade is with the EU, 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. 
 
¶13. (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 the Under 
 
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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. 
 
MISSION TURKEY 
 
¶14. (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. 
 
Visit Ankara's Classified Web Site at 
http://www.state.sgov.gov/p/eur/ankara/ 
 
MCELDOWNEY