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Cablegate: Debt Reduction for Iraq - Follow Up with Turkey

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

UNCLAS ANKARA 007040

SIPDIS

SENSITIVE

STATE FOR EUR/SE, NEA, AND EB/IFD/OMA
TREASURY FOR INTERNATIONAL AFFAIRS - SDONOVAN, MMILLS AND
RADKINS
NSC FOR MCKIBBEN AND BRYZA

E.O. 12958: N/A
TAGS: EFIN TU IZ
SUBJECT: DEBT REDUCTION FOR IRAQ - FOLLOW UP WITH TURKEY

REF: A. SECSTATE 261021
B. ANKARA 6646

1. (SBU) Summary: Visiting Treasury DAS Loevinger pressed
both the Turkish
Treasury Undersecretary and the Central Bank Governor on the
Iraq debt issue.
The Governor resisted and the Undersecretary asked for more
information.
Separately, the DCM delivered ref A talking points to Foreign
Ministry Deputy
Undersecretary for Economic Affairs. The Deputy
Undersecretary said the GOT has
not yet taken a decision on this issue. End Summary.

Treasury DAS Presses Treasury and Central Bank:
--------------------------------------------- -

2.(SBU) In his December 13 meetings in Ankara, Treasury DAS
Loevinger pressed Turkish
officials to provide comparable treatment for Turkish claims
on Iraq now that the Paris Club deal
is done. Central Bank Governor Serdengecti pushed back,
arguing that since Iraq's oil resources
gave it the potential to once again surpass Turkey in terms
of per capita income it was not right to
xpect Turkey to forgive its claims. He preferred a long-term
rescheduling that would allow the
Central Bank (which holds $1.3 billion of the $1.6 billion in
Turkish claims) eventually to recover
its principal. Turkish Treasury Under Secretary Canakci, on
the other hand, was more conciliatory.
Suggesting that Turkey was prepared to continue examining
forgiveness, he asked for detailed
information on the financial terms of the Paris Club
agreement as well as specifics about claims
of other non-Paris Club creditors.

DCM Demarches MFA:
-------------------------------

3. (SBU) Deputy Chief of Mission also delivered ref A talking
points and fact sheet to MFA Deputy
Undersecretary for Economic Affairs Ender Arat. Stressing
Turkey's interest in Iraq's economic revival
and the link to a debt restructuring, the DCM encouraged
Turkey to look at the big picture. Arat said
the GOT had not yet reached a decision, and claimed that the
Treasury and Foreign Trade Undersecretariats
would have a bigger role in the decision than the Foreign
Ministry. He said for now, Turkey is keeping
silent on the issue, and that Turkey would take into account
the realities in Iraq. He noted that Turkey is
not pressing for debt servicing to be resumed. The DCM also
raised the issue in separate meetings with
MFA Director General for Middle East Affairs, Oguz Celikkol.

Baghdad Minimize Considered.
EDELMAN

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