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Cablegate: Mersin Business Elite Glad for Regime

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

UNCLAS SECTION 01 OF 04 ADANA 0109

SIPDIS


DEPARTMENT FOR EUR/SE AND NEA/NGA
AND NEA/ARN


E.O. 12958: N/A
TAGS: ECON ETRD EWWT PHUM PGOV TU SY JO IZ ADANA
SUBJECT: MERSIN BUSINESS ELITE GLAD FOR REGIME
CHANGE IN IRAQ

1. (SBU) Summary: Mersin, one of the largest
ports in the Eastern Mediterranean, suffered
years of downturn after the first Gulf War.
Mersin's business leaders are optimistic they
will benefit from new opportunities in the new
Iraq. They do worry, however, the U.S. might
seek to "punish" Turkey for insufficient wartime
support, including perhaps the demise of the QIZ
idea. End summary.


2. (SBU) On April 11 we called on leading
businessmen in Mersin to get their take on the
new dawn in Iraq. Mersin (Icel Province) on the
south central coast is Turkey's third largest
port, after Istanbul and Izmir. It is also a
major shipping hub in the Eastern Mediterranean.
The city - with its estimated population of
600,000 putting it among Turkey's top ten - is
also home to a reasonably diversified economy.


3. (SBU) Mersin was a good example of the
persisting negative economic impact of the first
Gulf War on Turkey. That war and subsequent
sanctions on Iraq deprived Mersin of a
significant export market, deprived Mersin port
and shippers of transport trade revenue, and
arguably stunted Mersin's ambitions to expand its
tourism industry. All of that, however, is
yesterday's news, say Mersin's hopeful business
leaders.


What It Was Like With Saddam
::::::::::::::::::::::::::::::::::::::::::::: :


4. (SBU) Mahmut and Huseyin Arslan are brothers
who run the ARBEL company, a major trader and
exporter of foodstuffs based in Mersin. The
elder brother, Mahmut, is also a major figure in
both Turkish and international associations of
food exporters. The ARBEL company had
considerable experience supplying Iraq under the
UN's oil-for-food program.


5. (SBU) Mahmut Arslan was in the habit of
visiting Iraq every couple of months during the
past six years, i.e. during the era of the UN
oil-for-food program. Arbel was a regular
supplier under the program; it accounted for
approximately six percent of the firm's export
volume.


6. (SBU) In recalling the oil-for-food program,
Mahmut Arslan recounted how it was a politicized
exercise, on various fronts. For one, he claimed
that there were Turkish-nationalist
parliamentarians (MHP party) in Ankara who
expressed their displeasure that ARBEL was
getting the business. (Note: The Arslans are
Kurdish. End note.) For another, he claimed it
was clear the Iraqis played favorites with
suppliers on the basis of nationality. The
French and the Russians got the sweet deals.
Arslan recalled going to Moscow to clinch part of
an oil-for-food contract and meeting there with a
Russian businesswoman whose firm was in on the
deal; the woman, looking at samples of the ARBEL
merchandise that were to be shipped via her
company, could not correctly identify the samples
for what they were: chickpeas and lentils.
Finally, he told yet another story about how the
Iraqis themselves tried to freeze ARBEL out at
one point in the six-year program -- accusing
ARBEL of dealing with Israel. It took a while to
demonstrate to the Iraqi authorities that the
ARBEL shipments in question had actually gone via
Israel to UNRWA - the Palestinian refugee camps
run by the UN - at which point ARBEL got back
into the game.


7. (SBU) Now that a new day has dawned in Iraq,
the Arslan brothers are optimistic their company
and others like it in Mersin and in Turkey stand
to benefit. They say Turkish businessmen
traditionally have been well received in Iraq.
In fact, Mahmut Arslan went out of his way to
compliment Trade Minister Tuzmen for his flesh-
pressing skills with the old regime Baghdad;
Turkish firms benefited from his efforts. With
the sanctions gone, Turkish firms are poised to
do even better. Furthermore, and most
importantly, the Arslans believe Turkey will
indeed be very competitive in the Iraqi market in
certain sectors. They specifically mentioned
foodstuffs and construction. As for petroleum
and related services, the brothers smiled and
commented that it would seem that other countries
have something of a leg up.


8. (SBU) Turning from the specifics of their
own export and trading business to the more
general question of how Mersin might benefit from
the opening up of Iraq, the Arslan brothers were
quick to point out that Mersin's port is a
natural gateway for exporters to Iraq. The port
of Mersin is modern and large and is already used
by shippers as a major hub in the Eastern
Mediterranean. The Turkish port to Mersin's
east - Iskenderun - does not have the facilities
for container-cargo that Mersin does. Iskenderun
is also quite a bit smaller than Mersin as a
port. That said, Iskenderun's port does have a
deep draught, which makes it more suitable for
bulk cargo vessels. Therefore, Iskenderun, too,
could do well from a ramped-up flow of goods into
Iraq for the simple reason that the entire
indigenous port capacity of Iraq (i.e. Umm Qasr)
is too small to handle it alone. There should be
plenty for everybody, in other words. The
Arslans recalled that it was the Jordanians who
had benefited when Mersin and other Turkish
entrepots lost the Iraq trade after the first
Gulf War. Now, they say, it is time for Turkey
to get some of that back. And when it does,
Mersin - like port cities everywhere - will
inevitably see the positive economic ripple
effects from the increased activity of ships and
cranes and trucks.


The Chamber of Commerce & Industry: "What's with
the QIZ?"
::::::::::::::::::::::::::::::::::::::::::::: ::::
:::::::::::::::::::::::::::::::::::::::::::


9. (SBU) In our meeting with representatives
from the Mersin Chamber of Commerce and Industry,
we were probed about the status of Mersin's
application to be a QIZ. Their question had a
follow-up: given the "rough patch" that Turkey
and the U.S. went through because of Iraq, was
the whole QIZ concept now dead?


10. (SBU) This anxiety on the part of the
Chamber members was a sub-set of a more general
uneasiness that the US perhaps was going to seek
"retribution" against Turkey for failing to
support the war in Iraq. A couple of
participants in the meeting told us stories about
how they had done deals in anticipation of the
U.S. troop presence in Turkey, only to have the
contracts cancelled when the troops never came.
For this they fundamentally blame the Turkish
parliament, but they know that at the micro-level
some Turkish businessmen took a hit.


11. (SBU) The Chamber members described Mersin
as having a reasonably balanced distribution of
economic activity across shipping/transport,
manufacturing, agriculture, and services. There
is also an NGO - largely funded by the Chamber -
which is working specifically on economic
development. This NGO admits, though, it is
still at the beginning in the laborious process
of getting relevant actors (business, government,
labor, universities) to understand and buy into
the concept. They have high hopes, but realistic
expectations.


12. (SBU) On the down side, the Mersin Chamber
members immediately acknowledged as their biggest
problem the very same thing we heard from every
other single interlocutor we spoke to in Mersin:
the flood of poor and uneducated rural folk into
the city. The strain is evident everywhere: in
the labor market, in the educational system, in
the criminal justice system. We were told, for
example, that Mersin used to have a per capita
income that was three times the Turkish national
figure. Now, apparently, Mersin's figure has
fallen to match the national one.


The View from the Top
:::::::::::::::::::::::::::::::::


13. (SBU) Mersin has gone from a population of
30-40,000 to roughly 600,00 in a matter of a few
decades. It is estimated that more than half of
the current population consists of new arrivals
from southeastern Turkey, i.e. Kurds. This
massive migration has not only challenged the
economic infrastructure of the city, but also the
Mersin elite's image of its city. Mersin was an
unimportant town in Ottoman times, until - oddly
enough - the American Civil War. It was at that
time that the Confederate States turned to the
Ottoman Sultan for cotton, in the wake of Great
Britain's boycott. The Ottomans brought to
Mersin some Francophone cotton traders from Egypt
and the Levant to establish the business.
Therefore, starting in the middle of the 19th
century, Mersin grew up with a somewhat more
cosmopolitan feel than many other Anatolian
cities. In fact, it is still a point of pride
among some in Mersin that the city has the only
Ottoman-era cemetery in Turkey in which Muslims
and Christians and Jews were buried together,
rather than in separate sections. This kind of
quaintness or quirkiness is now basically being
buried under the weight of migration from the
southeast, it appears.


14. (SBU) This civic history was transmitted to
us by Cihat Lokmanoglu and Atahan Cukurova,
president and general secretary respectively of
the Mersin Maritime Chamber of Commerce. These
two men - born in Mersin, graduates of Tarsus
American College, and then U.S. universities -
represent the pro-American social and business
elite of Mersin. Like the Arslan brothers and
like the Mersin Chamber of Commerce & Industry,
they also are optimistic that both their own
businesses and the fortunes of Mersin in general
are due for an upturn in the wake of Saddam's
overthrow.


15. (SBU) The only cloud they see on the
horizon is, again, the possibility that the US
might devalue its partnership with Turkey, either
out of spite for Turkey's failure to support the
war or out of Turkey's diminished strategic value
in the region. What they find particularly
galling is the possibility that a possible
"tipping" factor for US-Turkish relations might
be northern Iraq. Having fought and won its own
war against the PKK - costing 30,000 lives over
15 years -- and having done so with the tacit
blessing of the US, it would be bitterly ironic
if the US and Turkey were to have a major falling
out over Kurds in another country. Both
Lokmanoglu and Cukurova lamented the failure of
the March 1 vote in the Turkish parliament,
attributing it to the "parochialism" of neophyte
AK Party politicians.


16. (SBU) Given their long experience in
maritime trade, Lokmanoglu and Cukurova can look
back on not only the bad years of the economic
embargo against Saddam's Iraq but also headier
days from Saddam's "first" war. Looking at each
other and laughing, the two men swapped tales
from era of the Iran-Iraq war, during which time
Mersin did a nifty business in cargo bound for
both sides. Indeed, they said, during that
conflict there even were ships that came to
Mersin laden 50-50: half for the Iraqis, half for
the Iranians. "Do you remember," one of them
said, "the time that there was that mix-up, and a
load of Iranian military uniforms got sent to
Iraq and the Iraqi uniforms went to Iran?"


17. (SBU) Comment: In Mersin, as in other
parts of Turkey, we are now seeing optimism about
the economic consequences to flow from the change
of regime in Iraq, albeit tinged with some
concerns specific to the US-Turkey partnership,
including the status of the QIZ legislative
proposal. End comment.
HOLTZ

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