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Cablegate: Ambassador's Meeting with Minister of Finance:

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

150841Z Mar 04

UNCLAS SECTION 01 OF 02 ANKARA 001511

SIPDIS


SENSITIVE


STATE FOR E, EB/IFD, AND EUR/SE
TREASURY FOR OASIA - JLEICHTER AND MMILLS
NSC FOR MBRYZA AND TMCKIBBEN


E.O. 12958: N/A
TAGS: EINV EFIN ECON PREL PGOV TU
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF FINANCE:
ECONOMIC REFORM AND INVESTMENT ISSUES


1. (Sbu) Summary: At a lunch meeting at the residence March
9, Finance Minister Unakitan discussed U.S. investment
disputes in Turkey, said the Uzans' cell phone company has a
potential buyer who is in touch with Motorola, and asserted
both GOT ownership of the economic reform program and a GOT
desire to maintain ties with the IMF after 2004. End
Summary.


Investment Disputes:
-------------------


2. (Sbu) The Ambassador pointed out that the Cargill zoning
problem had still not been resolved. The Minister said
Industry Minister Coskun told him that the law for the zoning
problem was ready, and he recommended the Ambassador meet
again with Minister Coskun to discuss the matter.


3. (Sbu) The Ambassador noted press reports of Deputy PM
Sener saying the Savings Deposit Insurance Fund (SDIF) had
met with the Uzan Group on a possible debt-restructuring
plan, and requested that any debt-restructuring plan should
also take into account Motorola's claims on the Uzans' Telsim
cell phone company. Minister Unakitan did not comment on the
debt restructuring proposal, but said that it was easy to
sell Telsim, and that any group ) foreign or domestic )
that is interested in Telsim, should first meet the Motorola.
He also confided that there was a group interested in buying
Telsim, and that this potential buyer was also in touch with
Motorola.


4. (Sbu) The Ambassador urged the GOT to implement data
exclusivity, pointing out that it was necessary not only for
the U.S. but to comply with Turkey's EU Customs Union
agreement. Unakitan said he was aware of the fact, and that
Prime Minister Erdogan was also following the issue and had
requested that both generic and R&D companies to meet to
resolve the issue. According to the Minister, PM Erdogan
also instructed the related offices to prepare a report for
him. The Minister himself had met with the generic
companies, and Faruk Yoneyman, Chairman of the Foreign
Investors Association. He was convinced that the sector
representatives were willing to meet with the other side to
find a solution. The Ambassador raised research-based
companies, concern about the lack of transparency in the
Health Ministry,s decision-making process, whereas it is
transparent for domestic Turkish generic producers. The
Minister recommended the Ambassador meet the Health Minister
again. As Minister of Finance, Unakitan is not directly
involved with data exclusivity, but offered his help if
needed.


Economic Reform:
---------------


5. (Sbu) The Ambassador noted reports that the IMF's 7th
review mission was on the verge of completion, and asked
about the &quality8 of future reviews and the banking
sector restructuring. Where, he said, there could be some
risk. The Minister said that the GOT saw the program as its
own program, and that is why it was able to complete the 7th
review discussions so quickly. He claimed that the GOT took
the necessary measures before the IMF asked for them.
Comment: Though the GOT proposed the 10 percent
across-the-board spending cut to Parliament before working
out its fiscal package with the Fund Staff, this measure only
went part way to close the fiscal gap, and Unakitan's claim
is exaggerated. End Comment. Unakitan said he was convinced
that the GOT would continue with fiscal austerity, as they
believed in benefits of the program.


6. (Sbu) The Ambassador asked Unakitan from which specific
off-budget account the GOT had agreed to transfer TL 500
trillion ($385 million) into the Budget as one of the
measures to close the fiscal gap. Unakitan said the amount
would come from more than one fund, and the IMF and the
Ministry were still working on the details. He added that
with the Public Financial Management and Control Law all the
off-budget funds would be included in the Budget as of 2005.


7. (Sbu) The Minister said the GOT would discuss post-2004
relations with the IMF in July, and both sides mutually
agreed not to make public comments about future of the
relationship after the current program ends at the end of
2004. In July, the GOT and the IMF will decide on the
details of the post-program relationship, but Unakitan said
the GOT wanted to maintain ties with the IMF, claiming that
under their government the IMF had become popular.


8. (Sbu) Unakitan said the GOT was working with the IMF and
the World Bank on banking sector issues, and they were
working on a new draft law to prevent future cases like the
Imar Bank collapse.


Broader Foreign Policy Issues:
-----------------------------


9. (Sbu) At the Minister's request, the Ambassador also
briefed him on Iraq and the Greater Middle East Initiative.
The Ambassador also raised terrorism finance and
non-proliferation issues (reported septel).


EDELMAN

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