VZCZCXRO7351
RR RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSR
DE RUEHNC #0017/01 0150740
ZNY CCCCC ZZH
R 150740Z JAN 09
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC 9472
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 1306
RUEAIIA/CIA WASHINGTON DC

C O N F I D E N T I A L SECTION 01 OF 03 NICOSIA 000017 
 
SIPDIS 
 
DEPT FOR EUR/SE 
 
E.O. 12958: DECL: 01/14/2019 
TAGS: PREL PGOV TR CY
 
SUBJECT: CYPRUS: TURKISH CYPRIOTS CALL EARLY ELECTIONS 
 
REF: A. NICOSIA 558 
     ¶B. NICOSIA 650 
     ¶C. NICOSIA 929 
     ¶D. NICOSIA 981 
 
Classified By: Ambassador Frank C. Urbancic for reasons 1.4 (b) and 1.4 
 (d) 
 
1.(C) The "TRNC's" "ruling" Republican Turkish Party (CTP) on 
January 5 announced early "parliamentary" elections for April 
19, 2009, a bump-up of ten months in the electoral calendar. 
The decision was triggered by an unsustainable budget crunch 
in the "Turkish Republic of Northern Cyprus" and the absence 
of extraordinary aid from Turkey.  The pro-solution CTP plans 
to highlight its CYPROB stewardship during the campaign, 
while tarring the main opposition and solution-skeptical 
National Unity Party (UBP) as a retrograde nationalist force 
whose unrealistic hard-line will further isolate Turkish 
Cypriots.  The opposition, which has long been clamoring for 
early elections, cheered the decision, given the worsening 
economy in the north.  A UBP victory would not spell the end 
of the UN-brokered peace process, which is led by Turkish 
Cypriot leader and "TRNC President" Mehmet Ali Talat,whose 
position would not be affected by "parliamentary" elections. 
Nevertheless, a UBP victory may usher in a stormy 
cohabitation with Talat. Whichever party can harness 
undecided voters, comprising over thirty percent of the 
electorate, will ultimately prevail in April.  End Summary. 
 
--------------------------------------------- ------- 
Deteriorating "State" Finances Forces Early Elections 
--------------------------------------------- ------- 
 
¶2. (C) On January 5, CTP leader and "TRNC PM" Ferdi Sabit 
Soyer set April 19 as the date for early "parliamentary" 
elections (Soyer on December 26 had announced his intention 
to move up the calendar.)  The long-expected decision was 
primarily the result of a worsening budget crisis exacerbated 
by a bloated state sector, and Ankara's refusal -- or 
inability -- to come to the rescue as long as CTP refused to 
conduct serious economic reform (reftels).  "Parliament" is 
expected to confirm Soyer's decision in a January vote, upon 
which the "High Election Council" will set the polling 
timetable.  By "law," active campaigning will begin one month 
before the actual elections. 
 
¶3. (C) Teberruken Ulucay, a CTP "MP," told us on January 7 
that, barring the present economic difficulties, the party 
would not have called early elections given its command in 
the 50-member "parliament" (CTP holds 25 seats, and coalition 
partner "Freedom and Reform" Party (ORP) has five.)  However, 
the economy has slowed dramatically over the past 18 months, 
with a virtual collapse in the property market and 
precipitous decline in tourist arrivals.  Meanwhile state 
expenses have been expanding by more than 20 percent annually 
while tax revenue has been flat.  The CTP decided to call 
elections for April before it ran out of money to pay public 
servant salaries. 
 
-------------------------- 
Turkey: No more extra cash 
-------------------------- 
 
¶4. (C) Unal Findik, another CTP insider, complained to Poloff 
on December 29 that Turkey's AKP government simply could not 
(or would not) provide the additional budget support needed 
-- on top of the 25 percent of the 2009 budget Turkey already 
provided -- to keep things going until February 2010. 
Turkey's position was cemented, he said, by CTP's refusal to 
carry out serious belt-tightening demanded by Turkey. 
"Ankara simply has its own problems," Findik said, ticking 
off Turkey's economic downturn, ongoing negotiations with the 
IMF, and municipal elections planned for March 2009.  Ulucay 
told us, however, that before announcing early elections, CTP 
had secured Ankara's promise to provide enough money to make 
payroll until early elections came.  (On January 7, a CTP 
delegation headed to Ankara, ostensibly to secure 
post-election support in the event of a first-place finish.) 
 
---------------------------------- 
Talat and CTP Firmly Pro-Solution 
---------------------------------- 
 
¶5. (U) CTP will pitch a pro-solution election message during 
the campaign.  In his January 5 announcement, Soyer conjured 
up past CTP achievements in attempting to reunify the island 
(all falling in April, coincidentally):  the 2003 opening of 
the Green Line checkpoints, the 2004 Turkish Cypriot Annan 
 
NICOSIA 00000017  002 OF 003 
 
 
"Yes" vote, and the 2005 election of former CTP leader Mehmet 
Ali Talat as "TRNC President."  Further, he argued that CTP's 
pro-solution stance had brought the party a resounding 
victory in February 2005 "parliamentary elections," with a 
record 44.5 percent of the vote versus 31.7 percent for UBP. 
(Note: The only other two parties that crossed the 
five-percent election barrier were the center-right Democrat 
Party (DP) with 13.5 percent, and the center-left Social 
Democratic Party (TDP) with around six percent.  ORP was 
formed in September 2006 by renegade UBP and DP deputies. End 
Note) 
 
¶6. (C) Findik claimed that only a Cyprus Problem solution 
would eliminate the two main issues troubling Turkish 
Cypriots:  political uncertainty and their "state's" lack of 
international recognition.  UBP, he charged, was led by 
CYPROB hawks whose hard line during EU accession talks in the 
1990s and in the early stages of the Annan Plan had hurt 
Turkish Cypriots and would now scuttle the ongoing 
UN-brokered process.  Sami Ozuslu, a CTP insider and 
columnist for party mouthpiece "Yeni Duzen," told us on 
January 6 that, while unemployment and a lagging economy were 
indeed important issues for T/Cs, they tended to support 
pro-solution parties during periods of active negotiation. 
Hasan Hasturer, in the January 8 edition of the mass T/C 
daily "Kibris," wrote that CTP's ability to spin the Cyprus 
Problem would be crucial to its election fortunes. 
 
------------------------- 
Lackluster UBP Leadership 
------------------------- 
 
¶7. (C) Both Findik and Ulucay were contemptuous of the 
November 2008 return of 70-year old Dervish Eroglu as UBP 
party leader.  Eroglu had led the party for over two decades 
before his short-lived departure in 2006, and served as "TRNC 
PM" for almost as long.  Eroglu, they argued, was "detested 
by most people" outside of UBP and would only hurt the party. 
 Findik even boasted that "we have no opponent," given 
Eroglu's purportedly negative approval ratings.  Others 
outside CTP share this view.  Serdar Denktash, leader of the 
center-right Democrat Party (DP), told us on December 16 that 
the return of Eroglu was the "best thing" to help DP's 
chances given the UBP leader's tired image.  Even Tahsin 
Ertugruloglu, the former UBP chairman whom Eroglu ousted in 
an ugly campaign, told Embassy officers in November that the 
party would suffer if its former boss returned. 
 
---------------------------------- --------- 
Opposition: "Obligatory, not Early Elections" 
-------------------------------------------- 
 
¶8. (C) In a December 17 meeting with the Ambassador, Eroglu 
had predicted early elections and a UBP victory -- despite 
the recent leadership battle -- given CTP's ham-handed 
administration and the recent economic slowdown.  Opposition 
parties predictably voiced elation upon CTP's decision, 
dubbing the early elections "obligatory, not early" given the 
meltdown of public sector finances.  UBP Secretary General 
Nazim Cavusoglu subsequently told us that Eroglu was already 
on the campaign trail, while Denktash said that DP would do 
well in the elections and was ready with a free-market reform 
plan.  On the left, Sami Dayioglu of the pro-solution Social 
Democratic Party (TDP), which stands the best chance of 
peeling off disaffected CTP voters, told us on January 6 that 
TDP hoped to emerge as the number-three party after UBP and 
CTP. 
 
-------------- 
ORP: New Faces 
-------------- 
 
¶9. (C) ORP, CTP's coalition partner of convenience and 
rumored favorite of Turkey's AKP,also publicly welcomed early 
elections.  Party leader and "FM" Turgay Avci said that ORP 
had become a "party of the masses" and was ready to go to the 
polls.  Rasih Resat, one of Avci's top aides, told us in 
November that ORP welcomed early elections, given T/C voters' 
growing disgruntlement with traditional Turkish Cypriot 
parties, including CTP. Resat said the party planned to run 
new faces, including "TRNC" citizens originally from Turkey 
or their children.  (Note:  ORP mouths pro-solution rhetoric 
as part of the present CTP-led coalition, but its ideology 
lies closer to UBP's.) 
 
--------------------------------------------- -------- 
Talat: New "government" must support solution process 
--------------------------------------------- -------- 
 
NICOSIA 00000017  003 OF 003 
 
 
 
¶10. (C) Mehmet Ali Talat's Chief of Staff, Asim Akansoy, told 
us January 6 that Talat supported the election decision and 
was optimistic over his party's chances.  A CTP victory would 
also provide a vote of confidence for his own negotiating 
efforts, Talat thought. On a January 13 T/C talk show, Talat 
called on any new government to support his solution efforts; 
otherwise, he warned, "chaos will ensue." Akansoy shared this 
worry.  He feared that a possible UBP victory would mean a 
rocky cohabitation between Talat and Dervish Eroglu, who 
presumably would run the "government" as "Prime Minister" and 
is highly critical of the present Cyprus settlement process. 
Akansoy may have reason for concern.  In response to the 
Ambassador's question during their December 17 meeting, 
Eroglu, who favors a loose confederation over a bizonal, 
bicommunal federation, said that if elected as "PM," he would 
support the ongoing negotiations provided there was 
"cooperation" between himself and Talat. 
 
------- 
Comment 
------- 
 
¶11. (C) Ankara (or it's purse strings) seems the force behind 
Soyer's decision to call early elections.  It is unclear, 
however, whether the GOT wants to get rid of, or at least 
chasten, the pro-solution CTP "government," or rather aims to 
spur the same belt-tightening on the profligate Turkish 
Cypriots that Turks are enduring themselves.  We lean to the 
latter explanation. Whoever wins on April 19 will need both a 
cash infusion and political support from Turkey to carry out 
painful "public sector" reforms. 
 
¶12. (C) We expect only the five parties presently in 
"parliament" -- CTP, UBP, DP, TDP, and ORP -- to pass the 
five-percent barrier, with CTP suffering a noticeable drop in 
support and UBP surpassing it or coming close.  The outcome 
will depend on undecided voters, a full third of the 
electorate.  While CTP might win some of them back with its 
pro-solution promises, there is wide-scale pessimism among 
Turkish Cypriots, dissatisfaction with the party, and few 
achievements thus far at the negotiating table to highlight. 
 
¶13.  (C) UBP's Eroglu, for many the architect of the present 
bloated and inefficient "civil service" system, will not be 
able to lure many of the undecided, however.  TDP will pick 
up some disgruntled CTP voters, though perhaps not enough to 
become the third-ranking force or coalition kingmaker.  DP 
will cash in on the Denktash name, but its appeal may not go 
farther than that.  And ORP should do well with the Turkish 
settler vote, though may scare off Turkish Cypriots, 
especially if it runs a large number of settler candidates. 
Urbancic