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Cablegate: Iraqi/Cpa-Turkey Trade Talks Held in Ankara, March

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

UNCLAS SECTION 01 OF 09 ANKARA 001709

SIPDIS


SENSITIVE


E.O. 12958: N/A
TAGS: PREL ETRD MOPS MARR TU IZ
SUBJECT: IRAQI/CPA-TURKEY TRADE TALKS HELD IN ANKARA, MARCH
10-11, PROGRESS ON BTA CONTRACTS, NOT ON SECOND BORDER
GATE, GOOD EXCHANGE OF VIEWS SETS STAGE FOR FUTURE TALKS

REF: A. 03 ANKARA 7444
B. ANKARA 1653


(U) Sensitive but unclassified.


-------
Summary
-------


1. (SBU) Iraqi/CPA-Turkey trade talks in Ankara, March 10-11
laid out positions of both sides on a range of bilateral
trade issues, including energy, water, bilateral trade
agreements and the possibility of opening a second border
gate. While talks on most issues were characterized by
active participation on both sides, the Turks were unwilling
to engage the Iraqis on alternatives to the Turkish proposal
for a second border gate between Turkey and Iraq. The
Turkish press played the talks as Turkey making multiple
trade related requests and the US rejecting all of them. The
talks set the stage for the next round, post-June 30, at
which the Iraqis will represent themselves without CPA
advisors. End Summary.


2. (SBU) A 16-person Iraqi/CPA delegation, led by Senior
Advisor to the MFA Amb. Ron Neumann and Trade Ministry
Director General Ahmad al-Mukhtar met with representatives
from the Turkish MFA, Undersecretariat for Foreign Trade and
Turkish General Staff in Ankara March 10-11. The agenda
included second border gate issues, electricity and oil
issues, water issues and outstanding contracts under the
January 2000 Bilateral Trade Arrangement (BTA). A joint
statement reflecting the discussion is at para 24.


--------------------------------------------- -
Political Outlook - TAL and Regional Stability
--------------------------------------------- -


3. (SBU) The talks began March 10 in a session chaired by
Turkish MFA Deputy Undersecretary Kilic. Kilic asked for a
briefing on the political outlook in Iraq, and Amb. Neumann
gave a short presentation on the Transitional Administrative
Law (TAL) explaining that it laid the groundwork for a
promising future, was the result of very difficult
negotiations among the Iraqi Governing Council and between
the IGC and the CPA. He noted that the TAL had struck a good
balance and that, as one IGC member put it, showed the Iraqis
were learning a new habit - compromise (see Ref B for report
of Amb. Neumann's meeting with senior MFA officials on the
TAL). Iraqi MFA Amb. Taha Shukor al-Abbasi assured the Turks
that the signing of the TAL reflected a national consensus
and demonstrated the unity of Iraq. He said Iraq was working
hard with all means available to normalize relations with its
neighbors and needed to find a friendly settlement of
differences. Amb. Taha said he had in mind an MOU on good
neighborly relations between Turkey and Iraq's MFAs and that
Iraq was working on a text. He also noted that the Iraqi
Minister for Foreign Affairs had stated in Kuwait that Iraq
was willing to sign a non-aggression treaty with all of its
neighbors, and was ready to discuss this with the Turkish
MFA. Iraqi MFA Amb. Sabah Omran said Turkey should
understand Iraq's difficulties as brothers and give Iraq a
chance to find compromise solutions. Iraq was depending on
Turkish and US support. Kilic noted that Iraq, its
government and its future were a regional and an
international matter, and that efforts would be required to
create regional stability through security. He assured the
Iraqis that Turkey saw eye-to-eye with them on the majority
of issues.


------------------------------
Iraq-Turkey Economic Relations
------------------------------


4. (SBU) Turning to the general state of the economic
relationship, Kilic noted that Turkey had been providing
assistance to Iraq since the war, and that Turkey's
experience, knowledge and location were all valuable for
Iraqi commerce and reconstruction. He pointed to the good
international reputation enjoyed by Turkish contractors, who
could be particularly important for reconstruction. Turkey
also was in a position to, and wanted to help in the telecom
sector, in banking and in meeting Iraq's electrical power
needs. He suggested that Turkey and Iraq could further
develop and expand their business relations. Turkey
supported relations between the private sectors of the two
countries, he added, noting that the future was not in
government-run business. The Turkish Union of Chambers of
Commerce and Industry TOBB) was highly developed. Its recent
visit to Iraq was a good beginning and should be repeated by
both sides. Trade fairs were also important. Turkey wanted
to see an increase in trade with Iraq. Kilic suggested the
possibility of re-establishing the border trade mechanism
that had been advantageous in the past. Turkish MFA
Coordinator for Iraq Reconstruction Amb. Okcun added that
Turkey would organize a trade fair for Iraq in Gaziantep in
April. TOBB wanted to visit northern and southern Iraq soon,
and wants to hold trade fairs in various parts of Iraq.
Kilic said Turkey would welcome the restoration of oil flow
in the Iraq-Turkey oil pipeline.


5. (SBU) Amb. Neumann replied that Iraq and CPA agreed that
increasing prosperity would increase stability and make more
room for reform. Private sector was clearly the way to go.
The Iraqi/CPA general approach to contracts was that all
interested parties should apply, and that the competition
would be open. The best work for the best price was the
policy and the law. Iraqi Ministry of Trade official Muhanad
Saleem noted that it would be very important to have a
Turkish trade fair in Baghdad. Turkey should be at the
Baghdad International Trade Fair later in 2004. He noted
that most halls at the fair grounds were badly damaged and
needed renovation. Kilic said that the first concrete
outcome of the talks was that both sides were interested in
trade fairs, and that Turkey would look seriously into being
at the Baghdad fair in November.


------------------------
Second Border Gate/Habur
------------------------


6. (SBU) Kilic noted that issues related to the border
crossing at Habur/Ibrahim Khalil had at times been a problem.
Capacity was an issue and there would be an increasing need
for more vehicles to cross. This led to discussion of
opening a second crossing. He said Turkey had been
encouraged by the position Iraq took on the issue in December
(Ref A). He said there was an immediate need to look at a
second gate. Turkey had studied the recent note on the issue
from the Iraqi MFA. This was a technical issue and the MFA's
diplomatic note had been general. To go forward there needed
to be an overall understanding. There was no question that a
second gate was needed, but the Turkish idea was
diversification of the route. The Iraqi suggestion for a
second gate near Habur that connected to the existing road
network did not serve that purpose at all, he said. The
existing route, Kilic continued, is congested and crosses
mountains (Note: the Iraqi proposed route avoids the
mountains and congestion on the Iraqi route is not a problem.
End note). Turkey wants to bypass the difficult terrain and
connect with the "mainstream" Iraqi road network. If Turkey
could not reach "Iraq" via its proposed route, it would
consider doing so via Syria. Iraq's objection that the
Turkish route is parallel to the oil pipeline follows from
the fact that the pipeline goes along the easiest route, as
Turkey wants the roads to do. Turkey was not convinced that
proximity of the road would jeopardize the pipeline's
security. In fact, Kilic said, it might enhance it. If
security were the main obstacle, the road could be moved
parallel but further from the pipeline. Kilic conceded that
the Turkish proposal, including a new bridge across the
Tigris and 80 km of new road, would cost more than the Iraqi
counterproposal of connecting to the existing roads, but cost
need not concern Iraq. It would be paid for by an
international consortium and would not be dependent on Iraqi
financing. He concluded by saying Turkey did not see the
Iraqi counterproposal as preferable or viable. It would, he
said, be much better to diversify the road network.


7. (SBU) In the most strident presentation of the day,
Turkish MFA Econ Deputy Director General Shakir Fakili
suggested that because in February, on average 3040
trucks/day had crossed Habur and in March the figure was a
record 3930, that Habur's saturation point had been reached.
Almost USD 1 billion in trade had crossed Habur in 2003,
including Ground Lines of Communication supplies. The main
problem was that Iraqi officials at Ibrahim Khalil were
charging arbitrary fees and fines, forcing Turkish truckers
to buy gas at 12 cents/liter vice 1 cent/liter for Iraqis,
and forcing them to buy the gas from specific stations
identified by the Kurdistan Democratic Party (KDP). He also
complained that radioactive scrap metal had been allowed to
be sent to Turkey. The KDP, he asserted, was using the gate
for political ends. They had confiscated books, flags and
maps. These were, he stated, examples of the KDP's
narrow-minded sectarian policy.


8. (SBU) Amb. Neumann noted that both sides agreed there
needed to be a new crossing and expansion of the cross-border
traffic for trade. Route selection was always difficult and
required serious discussion between experts. He pointed out
that the existing route is not/not now congested, and that
specialists could work to fix traffic flow issues. The
Iraqi/CPA side had not seen a detailed list of costs for the
Turkish proposal. There was currently a huge list of
unfunded projects in Iraq. If this were to be funded
internationally, he said, finding the funds would be a big
issue. If Turkey was offering to pay the full price, that
would change the matter. Cost analyses were needed and
estimates needed to be agreed upon. He noted the major issue
for Turkey seemed not to be where the crossing was located,
but where the route in Iraq ran, "an interesting topic for
bilateral discussions." Neumann noted that Turkey had made
the important commitment to work for 1850 trucks/day in each
direction in December, that the Iraqi/CPA side understood
that was a big undertaking, that Turkey had made good
progress, and that Iraq and CPA were grateful. He hoped
Turkey could continue to work to reach the target. Neumann
pointed out that the TAL makes customs fees the exclusive
purview of the federal government, but that the law was only
three days old and would take some time to get to full
implementation. CPA Lawyer Robert Maguire explained that for
Iraq to be in compliance with WTO regulations Iraq needed to
operate one uniform customs regime. On the matter of the
seized books, Amb. Neumann urged everyone to show restraint
and support for the spirit of Iraqi nationalism as the best
guarantee of each Iraqi's rights.


9. (SBU) Amb. Taha noted that the Iraqi position factored in
not just the pipeline, but plans for a railroad station and
line in the area. He noted that a crossing could be opened
east of Habur at Kani Masi quickly and have technical experts
look at the situation at the other proposed crossings near
Habur to resolve the differences there. Kilic suggested that
a working group take up the issue separately and see how far
they could get with it. In the working group, the Turkish
side refused to discuss the Iraqi proposed route or crossing
site.


------
Energy
------


10. (SBU) Kilic opened the energy discussion noting that
Turkey was prepared to increase the electricity it sold to
Iraq and to assist with oil pipeline repairs. Turkish MFA
Econ Dept Head Akif Ayhan reported that Turkey had sent a
BOTAS delegation to Iraq to share experience and discuss
upgrading the SCADA system. BOTAS was ready to continue its
cooperation and to send another delegation to Iraq. Turkey
was prepared to provide up to 1,000 MGW of electricity, but
the transmission lines and border connections needed
upgrading which required financing. If the financing could
be found, he said, this could be done. The BOTAS rep said
BOTAS needed to know what technical equipment was needed in
Iraq for the pipeline and needed information on the level of
SCADA investment. CPA Oil Ministry Advisor Gary Holcomb gave
a detailed presentation on the steps CPA and Iraq were taking
to protect and refurbish the oil infrastructure,
demonstrating, as Amb. Neumann pointed out, considerable
commitment from the Iraqi/CPA side. Kilic said the
presentation was reassuring and helpful.


11. (SBU) Kilic raised an issue of two Turkish companies that
had signed production sharing agreements with the Patriotic
Union of Kurdistan (PUK) for oilfields in northern Iraq.
Kilic said the PUK had confirmed the agreements after
liberation, that construction of rigs was underway and that
surveys of the fields were complete. He said Turkey expected
the PUK would ensure CPA/IGC endorsement of the agreements.
Okcun added that Turks had discussed this with PUK leader and
IGC member Jalal Talabani two weeks earlier, and that
Talabani had said he would raise it with CPA. Amb. Neumann
replied that one important element in the TAL was that Iraq's
natural resources would be controlled by the national
authorities. CPA and Iraq hoped Turkey would regard this as
positive. Anything that was agreed outside of the national
framework would need a new review. He added that
international law limited the legal rights of CPA to make
commitments for Iraq on the future control of its resources.
Holcomb added that he was aware of a number of other
proposals in Iraq for the same oil fields with other Turkish
companies and companies from other countries. It had always
been CPA policy to tell parties that such agreements must be
taken up with the legitimate Iraqi government. He encouraged
all parties interested and involved to meet with Ministry of
Oil representatives so that once a legitimate government was
in place, negotiations could begin. In a separate meeting
the following day, Mukhtar asked that Turkey await Iraq's
formulation of a national energy policy before pressing the
claims of the Turkish companies under their Production
Sharing Agreement contracts.


12. (SBU) Iraqi Ministry of Oil Director General Radhwan
al-Saadi said that his Ministry had heard rumors about these
contracts but had never been informed about them formally or
informally. Such contracts, he said, could not be taken
lightly. He said he did not know why Turkish companies
negotiated these agreements. They had to have known that
they needed national authority. The Ministry was now looking
at economic models, taxation issues, royalty issues, modes
and duration of contracts for national policy decisions.
Without a national policy on such matters, it was too early
to discuss production sharing. If there were to be a
decision to open oil fields to outside competition, it would
be free and open. Kilic took note of this. In a private
conversation on March 11, Kilic acknowledged to Amb. Neumann
the contradiction in Turkey's policy of insisting that Iraq's
natural resources be under national government authority yet
pressing for the honoring of production sharing agreements
signed with the PUK. He assured Neumann that he was under
instruction to emphasize that Turkey was not rejecting the
authority if the Transitional Iraqi Authority or of the TAL.


13. (SBU) Kilic then had the BOTAS rep describe an integrated
Iraq-Turkey natural gas project that he said had been
underway since 1996 with a twenty-year perspective to deliver
gas to Europe. There were also some pending payment issues.
Returning to oil issues, he noted that the UN had transferred
all authority to CPA for Oil-for-Food issues. Some crude had
been sent without payment being received. There were also
pending compensation issues. Turkey had applied for USD 1.2
billion, but the UN only accepted USD 170 million and only
paid USD 45 million. Director General al-Saadi replied that
the gas fields project was a large one with an international
consortium, but the project deal had not been signed or
approved. Regarding UN compensation, he noted this was a
UNCC issue and completely out of Iraqi hands, but CPA agreed
to look into it. The Iraqi/CPA side also undertook to
provide the Turks with information regarding the condition of
the Iraqi side of the Iraq-Turkey oil pipeline and on
outstanding fees, and agreed to study the Turkish proposal of
technical assistance.


14. (SBU) Holcomb and the head of SOMO's Crude Oil Department
3, Salar B. Afrif, met separately with MFA, BOTAS and TPAO
(state oil company) representatives to discuss energy issues
in more detail. The Turkish side raised a number of issues
connected to the Kirkuk-Yumurtalik pipeline. The Turkish
side noted that Iraq had not made scheduled payments for the
oil pipeline in 2002 and 2003. Afrif indicated that he
thought Iraq had made a payment for January 1, 2002 through
June 2, 2003. Holcomb promised to help settle the issue, and
both sides agreed to exchange information on payments
followed by a meeting in Baghdad. BOTAS officials said they
were pleased that oil was flowing through the pipeline and
asked for more information on the physical conditions to help
them better operate the Turkish stretch of the pipeline. For
example, BOTAS officials noted that the current flow rate was
quite low, which caused vibration problems requiring
compensating measures. They also noted that the oil
contained high water content (2 percent).


15. (SBU) TPAO President Dinc reported that Turkish firms are
interested in oil and gas projects in Iraq. He said that the
Turkish market was the best option for the eventual export of
Iraqi natural gas in the north, and that much of this gas
would be used to supply western Europe. TPAO was also very
interested in oil-field work and production in northern Iraq.
He reported that TPAO has modern equipment and experienced
crews, which are ready to quickly begin work in Iraq. He
also said TPAO is prepared to offer training to Iraq's oil
officials and workers. Holcomb was grateful for the
information and expressed surprise that he had not heard of
the Turkish offer earlier. He suggested that Turkish
resources could be used for oil field work-overs to begin
soon. On natural gas, Holcomb explained that Iraq will
develop its natural gas sources, but exports were not an
immediate priority. Most of this new gas production would be
used first for domestic purposes, especially power
generation, he explained.


-------
Banking
-------


16. (SBU) Kilic noted that Turkish banks in Iraq would
eliminate the courier problems at Habur (including disputes
over fees they are charged), and that Ziraat Bank has made a
formal application. Amb. Neumann explained that the three
banks that were granted licenses made the best offers. A new
tendering process was being developed. He noted that Turkish
banks could open offices in Iraq now, though without a
license they could not open branches.


--------------
Transportation
--------------


17. (SBU) Kilic reported that the number of road attacks in
Iraq on Turkish truckers was high and increasing. He said he
would appreciate the Iraqi/CPA side taking note and the
coalition enhancing security of Turkish drivers. Amb.
Neumann said that route security was critical and that the
CPA/Iraqi side took note. There was no higher priority than
winning the fight for security.


---------------
Tenders in Iraq
---------------


18. (SBU) Kilic said Turkey aspired to have Turkish
contractors get construction tenders due to their
qualifications and experience. He welcomed the decision to
give Turkey prime contractor status and said Turkey was also
ready for subcontracting. Turkish companies had already
signed a large number of contracts. Amb. Neumann said we
were trying to be fully transparent in the tender process.
If it seemed to Turkey that we were not, he asked the Turks
to please let us know. He urged the Turks not to rely on
invitations to participate but to actively follow the tenders
when they are announced. Okcun said Turkish companies were
complaining that they were not getting timely information on
tenders. They often had only a few days to put together
their project proposals. The CPA/Iraqi side promised to look
into this problem and see what they could do to help.


-----
Water
-----


19. (SBU) The Iraqis asked for data on this year's rain and
snow fall, and on the quantity of water being released
downstream by Turkey so Iraq could do its seasonal planning.
Kilic said he supported such an exchange of data. As
neighbors, there was no reason not to cooperate, but this
should be a two-way street. He asked the Iraqis to share
with Turkey Iraqi data on its water supply usage and
irrigation data. (Some of this data was exchanged the next
day). Kilic then explained that Iraq, Syria and Turkey had
been planning to discuss water in a tripartite commission,
but much had changed since the last tripartite meeting.
Turkey wanted any new steps to re-invigorate cooperation and
help find better ways to share the use of water.


-------------
Foreign Trade
-------------


20. (SBU) In the meetings at the Foreign Trade
Undersecretariat, some of the same ground was covered on
border fees. The Turks complained that one company in
northern Iraq had the export monopoly for scrap metal and
that the only way Turks could export it was to pay the KDP
USD 80/ton. Director General Mukhtar replied that on the
border fees, Iraq would do its best to eliminate them, but
they were a source of Kurdish revenue and the KDP would not
give them up "just like that." The IGC, he said, would solve
this matter. It was a political issue. On scrap, there were
two rules banning its export: one IGC rule and one CPA rule.
A set of regulations would soon be issued to regulate the
export. Maguire added that any export of scrap now was a
smuggling operation and against the laws of Iraq. The Turks
replied that in that case, Turkey would ban the import of
scrap into Turkey from Iraq. Mukhtar said he welcomed that.


---------------------------
Resolution of BTA Contracts
---------------------------


21. (SBU) The two sides agreed to a framework for processing
the BTA (Bilateral Trade Agreement)-registered and funded
contracts that were interrupted by the war. The Iraqi side
explained that it was disadvantaged by the widespread looting
and destruction of government offices and was dependent on
the Turkish side for copies of the contracts and statements
of the bank accounts. (The BTA arrangement required 70
percent of the value of the exported crude be credited to
Turkiye Halk Bankasi A.S. in Turkey. The remaining 30
percent was deposited on behalf of SOMO in an unknown bank in
Lebanon. The balance on the Turkiye account had at one point
risen to USD 578 million, of which USD 302 million had been
authorized by SOMO to be paid to Turkish producers for
completed shipments, an additional USD 19 million had been
paid for partial shipments and a final USD 18.5 million had
been paid without Iraqi approval.) The Iraqi side demanded
proof that the USD 18.5 million of products had been
produced, shipped and accepted by Iraq before the war.
Turkish Foreign Trade reps said that under the BTA there was
USD 60 million available for use in Iraqi purchases of
Turkish goods for export and Turkey wanted Iraq to utilize
that fund. Al-Saadi replied that it was Iraq's money. Iraq
wanted clear records and to receive all, but only, the goods
agreed upon. Then the sides must establish the amount
remaining in the account. To resolve the remaining
contractual issues, the Turkish producers must revalidate the
need for the products with the various Iraqi ministries and
state owned enterprises. In cases where the Iraqi side is
still interested in receiving the products, the sides agreed
they would be promptly shipped. Agreement was reached to
ship USD 140 million of railroad locomotives to the Iraqi
Ministry of Transportation. Agreement was also reached on
shipment of commercial oil drilling products to the Iraqi
Ministry of Oil. In cases where the Iraqi end-user either no
longer existed or no longer needed the specified product, the
Iraqi side argued the contracts would be "closed out." The
Turkish side said that whether or not they should be
terminated was for discussion and decision by the Turkish
government and each Iraqi ministry involved. The Iraqi side
insisted that funds which were not pledged to existing
"registered and funded" contracts must be deposited in the
DFI. The Turkish side initially claimed that there were many
more contracts (USD 257 million) existing than remaining
credit available (USD 237 million) in the account, but also
claimed that the entire account should be viewed as a general
fund to match against Turkish production contracts. The
concluding statement reflects the parties' disagreement on
this point.


--------------------
Border Trade Centers
--------------------


22. (SBU) The Turks suggested establishing Border Trade
Centers for free trade by local residents in areas around the
borders to prevent smuggling and legalize local border trade.
they said this had worked well at three locations on
Turkey's border with Iran. Habur was too busy to handle such
an arrangement, but once a location was agreed for the second
crossing, this could be done. Mukhtar said if it worked, it
could help promote good relations and suggested that one
small pilot project be introduced first, once a suitable
location is determined.


23. (SBU) The Turks noted that they had submitted a draft for
a preferential trade arrangement and hoped that Iraq and
Turkey could find agreement without violating WTO rules.
Mukhtar replied that the draft had been circulated to various
Ministries for comment, and many comments had already been
provided. This could be discussed at the next round of
bilateral talks. If there was agreement, it could be signed
sometime after June 30 and would add credibility to Turkey's
relations with the new Iraq Government.


24. (U) Begin Text of Agreed Statement:


The Turkish and Iraqi Delegations met in Ankara on March 9 -
12, 2004 to discuss common concerns. The two neighbors
recognized that economic cooperation provides the necessary
stability for democracy and reform. They intend to further
develop their mutually beneficial trade and investment
relations. They discussed the following points:


1. The Turkish side raised financial, operational and
security issues of the Kirkuk-Yumurtalik pipeline. The Iraqi
side explained in satisfactory detail the significant efforts
it has undertaken to provide security for the
Kirkuk-Yumurtalik pipeline including building ground and air
guard forces, a construction program for increased valve
shutoffs, and providing hazardous response teams to reduce
any economic and environmental damage. The Turkish side said
that the Turkish domestic market and transportation of
natural gas to Europe via Turkey constitutes the best option
for Iraqi natural gas exports. Turkish companies BOTAS and
TPAO expressed their willingness to develop five gas fields
in Iraq, and TOPRAS expressed its desire to purchase oil from
SOMO at the Ceyhan Terminal.


2. The two sides recognize that the current border gate at
Ibrahim Khalil-Habur is inadequate to support their growing
bilateral trade, and that a second border crossing point
would benefit both sides. The Turkish side did not accept the
Iraqi technical response to the Turkish technical proposal.
Further technical studies will be required.


3. The Turkish side noted the recent establishment of three
border trade centers on the border with another neighbor, and
agreed to use the results of this experiment in plans for
establishing similar sites on the Turkish-Iraqi border.


4. The Turkish side intends to provide seasonal data on
snowfall and reservoir levels sufficient for Iraq to develop
its water plan for this year. The Turkish side wants to
receive relevant data from the Iraqi side regarding their
reservoir levels and irrigation projects. Both sides
recognize the benefit of discussions about available water
resources and how they may be most efficiently used.


5. Both sides recognized the need to promptly resolve the
Border Trade Arrangement (BTA) of January 14 -16,2000.


a. The Iraqi side looks forward to receiving a full
comprehensive statement of the deposits and recent
withdrawals from the BTA related bank accounts. The Turkish
side will also report the remainder of the cash balance
described in paragraph 5 of the January 14-16, 2000 minutes,
and will disburse this pursuant to proper instructions from
the Iraqi side.


b. The original procedures for delivery and acceptance of
Turkish products to the Iraqi end user is the way to close
out the remaining BTA registered and funded contracts. The
Iraqi Ministry of Trade will remind the other relevant Iraqi
Ministries of the need to observe these procedures with
regard to outstanding BTA registered and funded contracts.


c. The Iraqi side notes the disbursement of approximately USD
18.5 million to Turkish companies for goods delivered to Iraq
where conformity with original procedures needs to be
established. The Turkish side is obliged to obtain and
provide to the Iraqi side all documents that would justify
these disbursements. In the event that insufficient documents
exist, the parties will revisit the issue.


d. Since the recent conflict constituted circumstances beyond
the control of either party and prevented the timely
performance of the BTA registered and funded contracts, the
Turkish producers will be requested to contact their Iraqi
end users and revalidate the Iraqi need for the products. If
the Iraqi end user validates this continued need, the
contracts will be performed and closed out following the
original procedure. Examples of where this should be promptly
begun include BTA registered and funded contracts
specifically identified to the Turkish side where the end
users are the Iraqi Ministry of Transportation's railroad
related contracts and Iraqi Ministry of Oil's contracts, as
shown in the attached annex (not attached in this cable).


e. If the Turkish producer no longer wants to produce the
specified product at the contract rate, or the Iraqi end user
no longer needs the specified product at the contract rate,
in the Iraqi view the contract is terminated. In the Turkish
view the contract should be submitted for consideration of
termination to the Iraqi ministries concerned and the Turkish
side (Undersecretariat of Foreign Trade).


f. The fact that an Iraqi end user no longer has a legal
existence would normally constitute a force majeure event;
the Turkish side may provide full contract documentation to
the Iraqi Ministry of Trade and request guidance on whether
the product specified in the contract could be accepted by a
different Iraqi end user. The Iraqi Ministry of Trade will
use its best efforts to locate an alternate end user to
permit performance of the BTA registered and funded contract.


g. It is the position of the Iraqi side that after
performance of the BTA registered and funded contracts, any
money remaining in the BTA related bank accounts should be
transferred to the Development Fund for Iraq. It is the
Turkish position that all money in the BTA account should be
utilized by the Iraqi side for BTA contracts.


6. The Iraqi side has circulated the Turkish draft
Preferential Trade Agreement among its ministries for
comment; both sides are very interested in discussing a
mutually beneficial bilateral trade agreement that is
consistent with the principles of the World Trade
Organization.


Witnessed by: Iraqi Side:
Ambassador Sabah J. Omran, Ministry of Foreign Affairs;
Director General Ahmad Al-Mukhtar, Ministry of Trade;
Director General Radhwan Al-Saadi, Ministry of Oil;
Director General Falah Hasan Habsi, Ministry of
Transportation.


Turkish Side:
Director General Tevfik Mengu, Prime Ministry,
Undersecretariat of Foreign Trade.
End text of statement.


25. (U) CPA has cleared this message.
EDELMAN

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Focus On: UN SDGs


UNFCCC: Greater Climate Ambition Urged As Initial NDC Synthesis Report Is Published

UN Climate Change today published the Initial NDC Synthesis Report, showing nations must redouble efforts and submit stronger, more ambitious national climate action plans in 2021 if they’re to achieve the Paris Agreement goal of limiting global temperature rise by 2°C—ideally 1.5°C—by the end of the century... More>>


2021: Critical Year To ‘reset Our Relationship With Nature’ – UN Chief

During this time of “crisis and fragility”, the UN chief told the United Nations Environment Assembly on Monday that human well-being and prosperity can be vastly improved by prioritizing nature-based solutions. Painting a picture of the turmoil ... More>>


Paris Agreement: UN Secretary-General António Guterres To Mark U.S. Reentry With Envoy For Climate John Kerry

Watch live at webtv.un.org UN Secretary-General António Guterres will join U.S. Special Presidential Envoy for Climate John F. Kerry at an event marking the United States’ reentry into the Paris Agreement this Friday. The discussion with the Secretary-General ... More>>