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Cablegate: Turkey Alphabet Soup: Istanbul's Myriad Business

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 ISTANBUL 000162

SIPDIS


SENSITIVE


STATE FOR E, EB/IFD/OMA AND EUR/SE
TREASURY FOR OASIA - MILLS AND LEICHTER
STATE PASS USTR - NOVELLI AND BIRDSEY
USDOC FOR 3133/USFCS/010/EUR AND 4212/MAC/OEURA/DEFALCO


E.O. 12958: N/A
TAGS: ECON EFIN PREL TU
SUBJECT: TURKEY ALPHABET SOUP: ISTANBUL'S MYRIAD BUSINESS
ORGANIZATIONS

Sensitive but Unclassified - not for internet distribution.


1. (SBU) Summary: Istanbul, Turkey's economic, commercial
and cultural capital, hosts a rich diversity of business
voices, all seeking to influence both government policy and
international perceptions of Turkey. Leader of the pack is
the venerable TUSIAD-- Turkish Industrialists and
Businessmen's Association-- now in its fourth decade, which
has won widespread respect (and occasional government pique)
for its cogent policy critiques. In recent years, a host of
other organizations has emerged. Tellingly, for a country
and society still grappling with the proper boundaries of
religion and a secular order, many of them are more avowedly
religious. Young business leaders have also stepped forward,
establishing groups to encourage entrepreneurship and to
enable them to step out from their elders' shadow. End
Sumary.


2. (SBU) Running the gamut: Business associations in Istanbul
come in a wide variety, beginning with those quasi-public
organizations used to organize the business sector,
continuing on to mixed organizations which seek to advance
such national goals as international trade and exports, to
the purely private and voluntary organizations that now crowd
the city scene. Numerically, quasi-public organizations, and
particularly the local Chambers of Commerce and Industry,
still hold pride of place. But given that membership is
compulsory (in that it is necessary for registration as a new
business entity), they have tended to have less of a lobbying
role. Only in recent years has the umbrella (and
Ankara-based) Union of Chambers of Commerce (TOBB) begun to
make its voice heard. Similarly, mixed organizations (such
as the Foreign Economic Relations Board and its affiliated
business councils) have focused on specific policy goals and
remained relatively uncontroversial. Not so the private
organizations. As exemplified by TUSIAD's recent
confrontation with the Gul government over both Iraq policy
and pursuit of economic reform, they have waded into the
thick of policy debates, and played an important role in
national politics. Their importance is not new (some ascribe
the fall of one of Bulent Ecevit's early governments in the
late 1970s to TUSIAD's opposition). But in an environment
where many perceive a lack of (or lackluster) political
opposition, they have assumed increasing importance. "The
markets are the government's opposition," one leading
investment analyst told us recently, and by extension these
organizations play a similar role. Inspired by TUSIAD's
success, the range of organizations has widened dramatically
in the last decade, and now encompasses "young" business
leaders, "independent" business leaders, and more avowedly
"religious" business leaders.


3. (SBU) The Heavyweight-- TUSIAD: If it has spawned a slew
of imitators, until TOBB recently began to take a more active
role, TUSIAD has had no serious challenger for the title of
Turkey's most influential business association. Founded in
1971, its 471 members represent over 1300 of Turkey's largest
companies, producing 47 percent of the value added in Turkish
production and a similar percentage of Turkey's exports. As
the numbers suggest, these members include the country's
largest industrial holdings. Past chairmen have included a
number of Kocs and Sabancis, and other members of Turkey's
most exclusive business elite. Once known as the "Bosphorus
Billionaires' Club," the organization has evolved with the
times, incorporating both representatives of foreign
companies and the professional managers who have assumed the
reins of many Turkish companies from their original founders.
Currently headed by Tuncay Ozilhan, who recently reluctantly
agreed to extend his two-year tenure for a third year, TUSIAD
eschews partisanship but is politically active in lobbying
for business interests. Recently it has focused on full
implementation of Turkey's ongoing economic reform program
and advancement of Turkey's candidacy for EU membership.
Based in Istanbul, the organization maintains permanent
offices in Brussels and Washington.


4. (SBU) While non-partisan, TUSIAD does not pull its
punches, as Ozilhan's mid-January critique of government
policy on both Iraq and reform showed. Though both sides
drew back from confrontation (and privately many TUSIAD
members argue the media blew the dispute up out of
proportion), Ozilhan succeeded in laying down a clear marker
of the importance to Turkey's business community of both
continued economic reform and cooperation with the U.S.
Beyond its policy advocacy in Ankara and abroad (before
Copenhagen, TUSIAD delegations inundated European capitals),
TUSIAD also publishes academic and other papers on essential
political and economc issues. A recent study on inflation
and growth dynamics, for instance, highlighted the economic
cost of the macro instability Turkey has experienced in
recent decades.


5. (SBU) The Flatterers-- MUSIAD: If imitation is the
sincerest form of flattery, TUSIAD has many admirers. Its
success has spawned a slew of similar groups, though
organized around different operating principles. Chief among
these groups is the Independent Industrialists' and
Businessmen's Association (MUSIAD), which groups many
mid-rank companies, and is known for more of a "Muslim"
identity. Founded in 1990, it currently has 3000 members,
divided among 30 branches throughout the country. It
organizes regular international and local trade fairs and
trade missions, providing a key mechanism for companies that
are new to international markets to make a first foray into
them. A less developed and structured organization than
TUSIAD, it consequently relies more on its leadership and its
views. The current MUSIAD President, Ali Bayramoglu, has
adopted a high public profile, commenting on pending economic
and political issues. Reflecting his constituency, however,
he has been less inclined to support the IMF consensus, and
more given to advocate populist measures. Given a congruence
of views, MUSIAD has close ties with the AK party, and a
dozen organization members were elected to parliament in the
November elections.


6. (SBU) Other groups include the Young Entrepreneurs
Association (GYIAD) and the Young Turkish Businessmen's
Association (TUGIAD), which both group the younger generation
of Turkish entrepreneurs. Both groups have participated in
USG-organized programs, as has the Business Life Cooperation
Association (ISHAD). The latter has taken part in several
trade missions to the United States, as well as a Public
Affairs organized Voluntary Visitor Program. Like Musiad,
its members come from small to medium-sized enterprises and
are Islamic influenced, though they follow modern business
practices, and do not circumscribe their business activities
for religious reasons.


7. (SBU) The Specialist-- YASED: While TUSIAD effectively
represents Turkey's largest economic actors, over the last
quarter-century the Foreign Investors Association (YASED) has
been similarly active in promoting the interests of foreign
companies in Turkey. With 315 members representing 211
companies, YASED has fought to improve Turkey's business
environment, focusing both on streamlining the torturous
procedures for approval of foreign investments and assisting
its members in their dealings with the Turkish government and
regulatory bodies. Reorganized in 1998, YASED developed a
committee system to address specific sectoral and regulatory
needs. It has played a leading role in efforts to draft a
new investment code and associated regulations and thereby
improve the investment climate in Turkey. In a recent
meeting it reported significant progress, noting that while
serious issues remained, Turkey's new AK government has
proved much more receptive to its proposals than were its
predecessors. (septel).


8. (SBU) The Hybrid-- DEIK: If most Turkish business
organizations are private, the current key actor in
developing and encouraging international trade had a mixed
character at its outset. In its early years the Foreign
Economic Relations Board (DEIK) received state funding, from
which it has now graduated. Instead it is financed
exclusively by its members and founding organizations, which
include TUSIAD and TOBB (TOBB's Chairman is always the
titular head of DEIK). DEIK seeks to encourage
international trade through bilateral business councils with
Turkey's leading trade partners. The current 66 councils
include 1134 representatives of 478 companies. Generally,
participating companies have undertaken business activity
with the target country, or plan to do so. DEIK essentially
acts as an intermediary between the public and private
sectors, due to its close working relations with both
government bodies and private sector institutions in Turkey.
It aims to encourage business development, to improve
conditions for bilateral trade, and to provide a forum for
delibersations on new avenues and forms of bilateral and
multilateral cooperation.


9. (SBU) TUSBC: For the U.S., the key subset of DEIK (and the
first council formed) is the Turkish-U.S. Business Council,
which functions as the counterpart to the American Turkish
Council (ATC). Founded in 1985, at the personal urging of
Turgut Ozal, TUSBC currently has around 100 members. In
addition to the major international Washington Conference it
organizes each March with the ATC, TUSBC also organizes other
programs, including investment and business seminars
throughout the U.S. and Turkey visits for American business
and political leaders. At its 2003 meeting, it adopted an
action plan to further strengthen its activities by creating
a consulting center and reinvigorating its sectoral
committees.


10. (SBU) TABA Amcham: While TUSBC is the American-Turkish
Council's counterpart, the U.S. Chamber of Commerce's
officially certified partner is the Turkish-American Business
Association (TABA), which was founded at almost the same time
(1986). Currently boasting 1000 (mostly Turkish) members in
7 chapters throughout the country, TABA has also sought to
enhance business relations and promote investment between the
two countries. It has also focused in particular on
encouraging cooperation in the Caucasus region. It focuses
on five sectors-- energy, telecommunication, transportation,
tourism, and environmental protection-- but has generally
been less active than its DEIK-affiliated counterpart.
Recognizing the complications and difficulties resulting from
the bifurcated organizational structure of Turkish-U.S.
business relations, some TABA members have recently
encouraged greater cooperation with TUSBC.


11. (SBU) Comment: Istanbul's diversity of business voices
provides a valuable resource to the Consulate, both in
seeking to advance U.S. business interests and in gleaning
business attitudes to issues of the day. However, the
multiplicity of voices can also be confusing, and the mission
has encouraged greater unity and cooperation among the
various organizations. Turkey's major independent policy
voices seem determined to use their influence to fill the
void left by the perceived absence of an effective opposition
to the majority AK government. While both sides will no
doubt try to avoid the heated clash of mid-February, there is
no doubt that TUSIAD and its counterparts will continue to
push their message at every opportunity. End Comment.
ARNETT

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