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UNCLAS SECTION 01 OF 03 ISTANBUL 000270 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN TU
SUBJECT: KEY TURKISH BUSINESS GROUPS DISCUSS POST-CAIRO 
ENVIRONMENT WITH S/P SLAUGHTER 
 
REF: ISTANBUL 209 
 
 ¶1.  (SBU)  Action request - see para 11. 
 
  ¶2.  (SBU)  (Summary)  Director of Policy Planning (S/P) 
Anne-Marie Slaughter met with representatives of MUSIAD 
(Independent Industrialist and Businessmen's Association) and 
TAIK (Turkish-U.S. Business Council) in Istanbul to discuss 
prospects for U.S.-Turkish relations in the aftermath of 
President Obama's June 4 Cairo speech.  The discussions 
covered a broad range of topics including trade, investment, 
energy and regional diplomacy.  MUSIAD members emphasized 
that while the President's April trip and his speech have 
been well received in Turkey and throughout most of the 
Islamic World they are not a substitute for concrete action 
on trade, direct investment and diplomacy.  The Turkish group 
offered that Reconstruction Opportunity Zones (ROZ's) along 
the Turkish-Iraqi border with Turkish participation would be 
significant in this regard, a point underscored later by 
TAIK.  Dr. Slaughter emphasized that the Obama Administration 
views the relationship with Turkey in a broader and more 
multi-faceted context than did the past administration, and 
she posited multi-faith initiatives and entrepreneurialism as 
key themes for Turkey in the coming years.  (End summary). 
 
  ¶3.  (SBU)  S/P Director Dr. Anne-Marie Slaughter and S/P 
staffer Dean Pittman met on June 25 with MUSIAD members 
Sevket Tulumen, Murat Kalsin, Vice-Chairman Nail Olpak, Dr. 
Ibrahim Ozdemir of Marmara University and Dr. Ali Resul Usul 
of Bahcesehir University.  The S/P visitors later met with 
Serif Egeli at a TAIK-hosted luncheon. 
 
--------------------------- 
TALK ALONE WILL NOT SUFFICE 
--------------------------- 
 
  ¶4.  (SBU)  MUSIAD was founded in 1990 and has 2850 
corporate members.  Unlike TUSIAD (Turkish Industrialists and 
Businessmen's Association) its membership tends to be small 
and medium sized companies (SME's) and the cultural 
orientation of the organization is conservative.  In the eyes 
of its leadership, MUSIAD's power is largely social and 
cultural.  They are not as economically powerful as TUSIAD, 
but they believe that they have strong contact with the 
"common man" in Turkey.  They also believe that the trend in 
Turkey will incline toward greater cultural and religious 
conservatism in the future, but that this should not be 
viewed as a trend away from democracy, since the two 
phenomena are not incompatible. 
 
  ¶5.  (SBU)  The MUSIAD interlocutors pulled no punches 
during the morning session.  Speeches and symbolic gestures 
are fine, they noted, but the region is waiting for action. 
One of the interlocutors noted that former President 
Clinton's image in Turkey was higher even than Obama's and, 
he observed wryly, "Even Bush gave an occasional 
well-received speech."  One speaker noted that Turkey has a 
foreign trade sector that approaches USD 290 billion, but 
that the volume of Turkish exports to the United States is 
almost insignificant.  (Note:  Turkey's exports to the United 
States in 2008 totaled USD 4.29 billion.  End note). 
 
------------------------------------ 
TURKEY WANTS A PEACEFUL NEIGHBORHOOD 
------------------------------------ 
 
  ¶6.  (SBU)  Dr. Ozdemir described a number of issues which 
he felt impeded better relations between the United States 
and Turkey.  He pointed out that Turkey lives, and trades, in 
a region which includes Iran, Syria and Iraq, and that the 
war in Iraq has greatly destabilized the region.  However, 
Turkey fears that any attempt on its part to maintain a 
stable and beneficial relationship with Iran and Syria will 
be frowned upon by the United States.  In addition, Ozdemir 
argued that America's "one-sided" support for Israel against 
the Palestinians is deeply detrimental in the eyes of Muslims 
around the world.  Invoking the well-known 2006 study on the 
Israel lobby in the United States by professors Mearsheimer 
and Walt, Ozdemir asked why the United States would pursue 
policies in Israel/Palestine that were clearly detrimental to 
its own (again, in Ozdemir's view) national interest.  He 
also highlighted a relative lack of U.S. direct investment in 
Turkey, and cited what he described as a "widely held view" 
in Turkey that the United States opposes the use of nuclear 
energy in Turkey.  To Ozdemir, it is ironic and troubling 
 
ISTANBUL 00000270  002 OF 003 
 
 
that Russia seems to be ahead of the United States both in 
terms of direct investment and nuclear energy. 
 
  ¶7.  (SBU)  Dr. Slaughter responded that the partnership 
between Turkey and the United States is changing in the sense 
that the Obama Administration views the bilateral 
relationship in broader terms than in the past.  The United 
States wishes to strengthen its commercial relationship with 
Turkey, both in trade and investment.  Dr. Slaughter 
emphasized that Turkey is well on its way to becoming a major 
influence in the region, and represents a "gateway" to the 
East and to the South.  She urged Turkey to pursue "soft 
power" (diplomacy, trade, etc.) toward that end. 
Emphatically, she invoked entrepreneurialism and multi-faith 
initiatives as major avenues that will enhance Turkey, both 
domestically and in its growing role as a regional player. 
The new paradigm for the bilateral relationship between 
Turkey and the United States is no longer merely "strategic" 
in the traditional military sense but also cultural, social 
and commercial. 
 
------------------------------ 
LUNCH WITH SERIF EGELI OF TAIK 
------------------------------ 
 
  ¶8.  (SBU)  TAIK, in cooperation with TOBB (Union of 
Chambers and Commodity Exchanges in Turkey) seeks to 
"pioneer" the Turkish business world in its foreign 
relations, and generally has a more pro-Western and 
multinational outlook than does MUSIAD.  Perhaps not 
surprisingly, the TAIK Vice Chairman was more moderate in 
tone and a bit more upbeat than were the MUSIAD 
representatives. Egeli noted, for instance, that the United 
States no longer has textile quotas, though he conceded that 
Turkey pays higher customs duties than some of its 
competitors, such as Egypt.  In any event, Egeli pointed out 
that China already has 80% of the U.S. textile market, and 
therefore the only realistic growth area for Turkey would be 
in high-end textiles.  Interestingly, he believes that 
Islamic Finance has great potential in Turkey, and that 
Turkey's four "participation" banks could possibly grow in 
the areas of trade and retail finance (see reftel).  Egeli 
also underscored that everyone in Turkey wants to do business 
with Russia, currently one of its biggest trading partners. 
 
  ¶9.  (SBU)  Egeli views trade with Iraq as crucial and 
growing, and thinks that Reconstruction Opportunity Zones 
(ROZ's) similar to those proposed for Pakistan are an 
exciting possibility.  (Note:  In June the House of 
Representatives passed a bill authorizing the creation of 
ROZ's in Pakistan and Afghanistan, and the bill is currently 
in committee in the Senate.  End note).  ROZ's along Turkey's 
Iraq border would be welcome by many Turkish businessmen, 
though this would require Congress to pass legislation. 
Egeli believes that the ROZ's could become high-tech zones, 
with an emphasis on desktop and laptop computers, 
telecommunications and computer software.  He noted that 
Cisco Systems, Microsoft and other high-tech multinationals 
already have a presence in Turkey.  Regarding the Pakistan 
ROZ's, Egeli offered to host a conference in Turkey outlining 
details on how Turkish businesses could participate.  ConGen 
Istanbul is prepared to follow up on the offer pending 
Washington's concurrence. 
 
 ¶10.  (SBU)  Comment:  The discussions with MUSIAD and TAIK 
illustrate both the opportunities and the pitfalls in the 
USG's evolving relationship with Turkey, and more broadly 
with the Muslim world.  President Obama's interest in greater 
trade and investment between Turkey and the United States, 
and our encouragement of Turkey to utilize soft power with 
its neighbors, dovetails beautifully with Turkey's quest to 
become a regional political and economic leader.  The Turkish 
private sector, however, continues to see trade with the 
United States as difficult to impossible without special 
concessions such as ROZ legislation.  They have tried for 
years, without success, to have Turkey included in Qualified 
Industrial Zone (QIZ) legislation.  Many people in Turkey and 
the Muslim world will continue to take a wait-and-see 
attitude on whether the United States seriously intends to 
help create a stable and prosperous neighborhood in the 
region.  End comment. 
 
 ¶11.  (SBU)  Action request.  On the margins of the meeting, 
MUSIAD representatives asked for USG assistance to put them 
in contact with appropriate trade association contacts in 
 
ISTANBUL 00000270  003 OF 003 
 
 
Iraq to facilitate Turkish-Iraq commerce.  ConGen Istanbul 
requests Department guidance on how best to assist MUSIAD to 
develop commercial contacts in Iraq, either via Embassy 
Baghdad FCS, or directly between MUSIAD and Iraqi trade 
association counterparts. 
 
 ¶12.  (U)  This cable was cleared by S/P Director Slaughter. 
 
WIENER