Cablegate: Discussion with Mfa On Turkey-Iraq Trade And

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





E.O. 12958: N/A

1. (U) This cable contains an action request. See para 8.

2. (SBU) Summary: DCM met with MFA Deputy U/S for Economic
Affairs Alev Kilic May 29 to discuss ways in which Turkey
could begin establishing a normal trading relationship with
Iraq. Kilic said the MFA was ready to move forward on
swapping Iraqi refined fuel for Turkish LPG/benzine, getting
Kirkuk-Yumurtalik oil flowing again, and normalizing
cross-border trade and transit with Iraq, but requested that
the U.S. provide information on each of these issues (see
action request para 8). End summary.

3. (SBU) DCM emphasized to MFA Deputy U/S for Economic
Affairs Alev Kilic on May 29 that establishing normal trade
links between Turkey and Iraq was key to the reconstruction
of Iraq, and would also benefit Turkey's economy. DCM raised
three situations where Turkey could help. First, he noted
that Iraq was facing a critical shortage of Liquid Petroleum
Gas (LPG) and benzine (gasoline). The DCM said he understood
that SOMO had signed a barter contract with the Turkish
company Delta Petroleum, under which Delta would supply LPG
and benzine in return for Iraqi refined fuel oil, which Delta
would export to third countries. Since the U.S. was
currently buying these products in Turkey and delivering them
to Iraq through U.S. military contractor KBR, a swap deal
with SOMO would help alleviate the shortage in Iraq while
saving the U.S. taxpayer tens of millions of dollars (and
providing business to Turkish companies). DCM requested the
MFA's assistance in obtaining rapid GOT approval of the deal
(GOT approval is needed so the goods can cross the border.)

4. (SBU) Kilic responded that the MFA team that had
recently traveled to Iraq had reported the LPG/benzine
shortage in Iraq. He said the import of oil products from
Iraq was subject to certain restrictions and was governed by
the Foreign Trade Undersecretariat. Kilic said the MFA would
look favorably on a swap deal, and would pass this on to the
Trade Undersecretariat. (Note: On May 28, Embassy had
arranged a meeting for Delta executives with Finance Minister
Unakitan, with whom Ambassador had previously raised this
issue. During the meeting, Unakitan called the Foreign Trade
Under Secretary to instruct him to try to find a solution.
Foreign Trade chaired an interagency meeting on the subject
on May 29, which we understand was "positive" but took no
decision. Late on May 30, Delta Petroleum executives called
to report that Finance Minister Unakitan had informed them
that the Foreign Minister would "clear" on the deal shortly,
and that he would personally take it to PM Erdogan for final
approval. End note)

5. (SBU) The DCM said the second area where Turkey could
help was in getting the Kirkuk-Yumurtalik oil flow started
again. Kilic reponded that the GOT shared our interest in
resuming the flow, in part because the Turkish refinery at
Kirikalle was designed for Iraqi crude (reftel). Kilic said
that state oil refining company Tupras was ready to start
importing crude from Iraq, but needed a contact name at SOMO.
DCM responded that we would try to provide the GOT a contact
at SOMO as soon as possible. The DCM and Kilic agreed that
the status of the oil already in storage at Ceyhan (which was
pumped before sanctions were lifted) was not clear, and
agreed to raise this issue with their respective UN missions.
(Note: Embassy subsequently obtained SOMO contact
information from ORHA staff and passed it to MFA and Tupras.
End note)

6. (SBU) Finally, DCM asked for the GOT's assistance in
establishing simplified procedures for the passage of cargo
and people at Habur Gate. For example, DCM said, U.S.
military contractor KBR was now moving hundreds of Turkish
trucks across the border daily, and needed to send some of
its expat employees with these convoys. Under current
procedures a U.S. citizen seeking to cross into Iraq at Habur
required approval from several GOT agencies after the embassy
sent diplomatic note, a process which rook weeks.

7. (SBU) Kilic responded that he had just participated in
an interagency meeting in which the GOT decided that May 22,
the day sanctions were lifted, marked the dawn of a new era
for transit and trade between Turkey and Iraq. He said the
GOT would seek to normalize all transit and trade across the
border, including for non-Turkish citizens, as soon as
possible. DCM and Kilic agreed that the entry requirements
for individuals seeking to enter Iraq were not clear, and DCM
said he would try to obtain this information if possible.
Kilic told DCM he would update us as soon as new procedures
were in place. In the meantime, he said, the GOT wanted to
request U.S. assistance on the Iraqi side of the border.
Kilic said that although authorities in Iraq had announced
that no customs duties would be levied on imports into Iraq
until 2004, the "local administration" in Northern Iraq was
charging trucks from Turkey "fees" at whim. He asked if the
U.S. could help resolve this situation. MFA Coordinator for
Iraq Reconstruction Ambassador Ahmed Okcun echoed this
complaint in a May 29 conversation with EconCouns.

8. (SBU) Action request: In order to respond to the GOT's
questions and concerns, and move these issues forward as soon
as possible, post requests Department and/or USUN's guidance
on the following issues:

-- The legal status of the oil in storage at Ceyhan, which
was pumped before sanctions were lifted;

-- Any information regarding entry requirements for
individuals seeking to travel to Iraq across the Turkish

-- Any information Department can provide on the GOT's
claims that local groups are charging levies for imports from
Turkey into Northern Iraq.


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