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RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSR
DE RUEHNC #0233/01 0931244
ZNY CCCCC ZZH
R 031244Z APR 09 ZFF4
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC 9762
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUEHBS/USEU BRUSSELS
RUCNDT/USMISSION USUN NEW YORK 1415

C O N F I D E N T I A L SECTION 01 OF 02 NICOSIA 000233 
 
SIPDIS 
 
DEPT FOR EUR/SE 
 
E.O. 12958: DECL: 03/27/2019 
TAGS: PREL PGOV TR CY
SUBJECT: CYPRUS: DENKTASH SCION A RELUCTANT KINGMAKER IN 
T/C ELECTIONS 
 
REF: A. NICOSIA 186 
     ¶B. NICOSIA 199 
 
Classified By: Ambassador Frank C. Urbancic for reasons 1.4(b) and 1.4( 
d) 
 
¶1. (C) Summary:  Denktash family scion and Democrat Party 
(DP) leader Serdar Denktash believes his center-right party, 
the perennial junior coalition partner in Turkish Cypriot 
(T/C) politics, may once again play that role after April 19 
"parliamentary" elections.  Nevertheless, the second son of 
long-time T/C leader Rauf Denktash is reluctant to enter into 
a coalition with either of his two most likely partners, the 
National Unity Party (UBP) or the Republican Turkish Party 
(CTP), because of personal disdain for their respective 
leaders.  In a recent meeting with Embassy staff, Denktash 
voiced support for the negotiation efforts of T/C leader 
Mehmet Ali Talat despite his total lack of confidence in the 
process.  The DP leader said that the current elections 
likely would not produce a "government" able to tackle the 
north's main ailment, a weak economy plagued by an 
inefficient and bloated public sector, meaning further 
political instability might soon follow.  Whether Turkey's 
AKP, with whom the Denktash family has openly feuded, would 
approve of any member of the family returning to power is an 
open question.  End Summary. 
 
----------------------------- 
DP aiming for number-two spot 
----------------------------- 
 
¶2. (C) In a March 17 meeting with Embassy officers, Serdar 
Denktash was confident that DP, a hodgepodge of free market 
businessmen and Denktash family stalwarts, would emerge as 
the number-two T/C party in a very close "parliamentary" race 
with CTP and UBP in April 19 elections.  He thought DP might 
even double its 13.5 percent haul in 2005 elections, thanks 
to anger at CTP and voter hesitancy over the possible return 
of Dervish Eroglu, the old guard UBP leader (DP garnered 
around 13.5 in a recent poll, as indicated in Ref A.) 
Denktash added that his father, beloved by hard-liners and 
older voters, was actively campaigning for him for the first 
time.  Others in the party shared his optimism.  Ertugrul 
Hasipoglu, Denktash's number-two, told us on March 18 that DP 
would capitalize on undecided voters and might obtain 25 
percent, its take in 2006 local elections. 
 
------------------------------------- 
"We need to stand on our own two feet" 
------------------------------------- 
 
¶3. (C) Denktash hopes to lure voters and win Turkey's support 
with a program of free market reforms to shrink the bloated, 
inefficient public sector and energize the private sector -- 
key goals of Ankara as well.  Mustafa Arabacioglu, DP's 
candidate in 2005 "Presidential" elections, told us on March 
19 that the Turkish Cypriots needed to stand on their own two 
feet.  He lamented that generous Turkish aid, which amounts 
to about USD400 million per annum and compromises just under 
one-quarter of the "TRNC" budget, would simply be wasted on 
imported goods, absent serious reforms.  Denktash -- in a 
line oft-repeated by the previous Turkish "Ambassador" here 
-- said the only way to force Greek Cypriots to accept a 
settlement would be to increase de facto T/C autonomy by 
placing the economy and public sector on a sustainable 
footing. 
 
¶4. (SBU) In the current elections, DP proposes an initial 
program of tax cutting and fee reduction on businesses to 
stimulate the economy, which has been in recession for the 
past 18 months.  In a sop to the Rauf Denktash loyalists, 
however, the party also wants to change banking regulations 
so that non-Turkish Cypriot-titled land can be used as 
collateral for loans (at present, although there is no 
outright prohibition, banks in the north do not give credit 
against original GC-titled property.)  Hasipoglu added that 
DP would be reluctant to enter a coalition whose members did 
not share this reformist zeal. 
 
--------------------------- 
"Nothing Happening in Talks" 
--------------------------- 
 
¶5. (C) Denktash, who enjoys a close personal relationship 
with Talat stemming from their cooperation during the Annan 
Plan, voiced support for the T/C leader's negotiating efforts 
despite overall skepticism over its eventual success and 
 
NICOSIA 00000233  002 OF 002 
 
 
disagreements over certain issues, such as Talat's acceptance 
of "single sovereignty" for the unified state (many T/Cs, 
including DP, favor a common sovereignty that emanates from 
the constituent states.)  He joked that his concern over 
issues like sovereignty probably were moot, since "nothing is 
happening in the talks now."  However, as long as Turkey 
supported a solution -- and by all intents it did, Denktash 
thought -- the outcome of the April 19 elections would not 
substantially alter the present pro-solution T/C course. 
 
------------------------------------- 
"Maybe better outside of 'government'" 
------------------------------------- 
 
¶6. (C) Despite confidence in a second-place DP showing, 
Denktash evoked no real desire to join a new coalition.  He 
said that Eroglu, the UBP leader, was "hard to work with" 
and, after being dumped once by CTP, he was skeptical of the 
Ferdi Soyer-led party.  Nevertheless, he thought CTP and 
Soyer had learned their lessons over the past five years and 
were more likely to enact reforms, albeit limited, palatable 
to his party.  Eroglu, on the other hand, "was the original 
criminal" who, along with UBP, had created the present 
dysfunctional system in the north.  Denktash saw DP's choice 
as either supporting a UBP-led minority "government" or 
watching the "antics" of a grand UBP-CTP coalition from the 
sidelines.  He predicted that no strong "government," i.e., 
one capable of conducting desperately needed but painful 
structural reforms, would emerge on April 19.  Consequently, 
subsequent political instability in the north might again 
force early elections within a couple of years. 
 
------- 
Comment 
------- 
 
¶7. (C) Given that the Denktash family name alone is worth 10 
percent in northern Cyprus, Serdar's boasting of a strong DP 
showing seems possible.  Whether he will obtain second-place 
status is harder to gauge.  Denktash may also be exaggerating 
his reticence to enter a new coalition, since DP, lately 
bereft of its ability to dole out favors and thus riven with 
defections, has paid dearly for its time in opposition.  As 
for Turkey, AKP and PM Erdogan -- with whom the Denktashes 
have publicly feuded -- may not look kindly on a return to 
power for the family.  Denktash has said as much, complaining 
that AKP was still working against him and his party. 
Urbancic