Cablegate: Turkey Scenesetter for May-June Codels

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

UNCLAS SECTION 01 OF 07 ANKARA 002910

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV OREP PINS ECON MARR TU
SUBJECT: TURKEY SCENESETTER FOR MAY-JUNE CODELS

1. Summary: The Erdogan government's drift on relations with
the U.S., with the EU, and on reform is of concern, as are
trends inimical to religious freedom. U.S. Turkish relations
remain solid in specific areas and we look for new
opportunities to expand cooperation, but our relations are
not a strategic partnership at this stage. End summary.

2. The single-party government of Prime Minister Tayyip
Erdogan maintains an almost two-thirds majority and his AK
Party (AKP) faces no viable political alternative at this
stage. Erdogan insists that his government is democratic;
has no hidden Islamist agenda; and has maintained its
EU-oriented and economic reform pace. Erdogan and Foreign
Minister Gul assert that they have expressed sufficient
support for bilateral relations with the U.S.; that Turkey's
Iraq policy has proven right (as opposed to what they see as
U.S. mistakes); that Turkey shows religious tolerance and is
the victim of "Islamophobia" in the West; and that the ball
is now in the EU's, Cyprus's, and Armenia's court given what
Erdogan and Gul claim are sufficient Turkish gestures on
EU-related reform, Cyprus, and Armenia.

3. However, the scissors have widened between what Erdogan
and his government assert and what a wide spectrum of
observers see as a lack of political leadership or
transparent and consistent decision-making from the Erdogan
government; a serious, continuing drift -- in places
regression -- on reform; serious problems with religious
freedom, including more open anti-Christian, anti-Jewish, and
anti-Alevi (heterodox Muslim) sentiment; and the government's
failure to tackle poverty or corruption, including within its
own ranks. They see as well a lack of communication or
understanding between the Turkish government and the Turkish
State (Presidency, armed forces, Judiciary, national
intelligence organization, bureaucracy), with worrisome
implications for governance.

4. Moreover, although the Turkish General Staff has made
clear, strong declarations underscoring the centrality of
bilateral relations with U.S., Erdogan and Gul have lagged,
making largely perfunctory statements on the importance of
strong relations with the U.S. Erdogan has been more willing
to speak sharply against the EU, at one point recently even
charging that some EU countries aim to split Turkey. On
Syria, while the Turkish military and some other State
institutions express concern, both the Erdogan government and
President Sezer continue to insist on Turkey's right to
develop relations with Assad, whom they tout as a reformer.
On Iran, the Turkish State (especially the military and MFA)
have spoken of the danger of Iran's pursuit of nukes;
however, the Erdogan government has sent mixed signals. Some
of Erdogan's advisors also appear to advocate using Russia as
an alternative to NATO or the EU.

5. In this environment, the U.S. approach has been to
emphasize areas where our cooperation has remained solid --
Afghanistan, the Balkans, Cyprus, the Baku-Tbilisi-Ceyhan oil
pipeline, Turkey's EU candidacy, and the war against
terrorism -- and to look for distinct projects (e.g., the
Broader Middle East and North Africa Initiative) where we can
cooperate, rather than continue to speak of a strategic
partnership. We are also ultra-careful to avoid calling
Turkey a "moderate Islamic country" or a "model" for anyone
else; both phrases enrage the secularists, who think the U.S.
is trying to create a more religiously-oriented Turkey, and
the more Islam-oriented segments, who see Turkey as a system
which has repressed natural expressions of religion and
faith.

Cyprus
------

6. Turkey made an historic effort to reach a comprehensive
Cyprus settlement last year, which failed when the Greek
Cypriots voted down a referendum on the Annan Plan in April
2004. Since then, the Turks have been frustrated that the
international community, particularly the EU, has not moved
to end the isolation of the Turkish Cypriots who, unlike the
Greek Cypriots, approved the Annan Plan referendum. The
Turks are pressing for direct trade and direct flights with
north Cyprus.

7. The U.S. has done more than any other country to reach out
to Turkish Cypriots. Under our $30.5 million Cyprus
Partnership for Economic Growth (CyPEG) we have helped train
Turkish Cypriot businesses and bankers, and created
opportunities for them to expand their markets and clients.
In February, the Embassy Ankara Commercial Counselor
accompanied a delegation of representatives of U.S. companies
on a visit to north Cyprus, flying directly there from
Turkey. We have increased visa validity for Turkish
Cypriots. We have increased scholarships for Turkish Cypriot
students. Our Ambassador has regular contact with
"President" Talat. On May 30, the U.S. Congressional Turkey
Study Group will fly directly to north Cyprus from Turkey for
meetings with Talat and others.

Armenia
-------

8. In 1993, Turkey closed the border with Armenia in response
to Armenia's occupation of Azerbaijani territory. There are
no diplomatic relations between the two. Turkey says the
border will remain closed until Armenia withdraws from at
least some Azerbaijani territory, ceases pushing for Armenian
genocide resolutions in third countries, and formally
recognizes the borders established in the 1921 Kars Treaty.
However, there is indirect trade between the two countries
through Georgia, mostly exports of finished goods from Turkey
to Armenia. There are also four weekly direct charter
flights between Istanbul and Yerevan.

9. PM Erdogan and President Kocharian exchanged letters in
April but failed to meet at a recent Council of Europe summit
in Warsaw and indeed traded heavy charges and countercharges
about the massacres of 1915. We are encouraging the two
sides to seize the opportunity for rapprochement. The Turks
lobby against an Armenian genocide resolution in the U.S.
Congress, but stoutly resist our advice that their position
on the issue would improve if the GOT moved forward on
bilateral relations.

Syria
-----

10. There is a widespread belief in the Turkish government
and bureaucracy that Bashar Assad is a would-be reformer who
should be supported against more hard-line Ba'athists in
Syria; FM Gul has stated this publicly on at least one
occasion. The Turks are also seeking to expand their
economic ties with Syria. PM Erdogan visited Damascus in
December; President Sezer visited in April; Mrs. Erdogan
visited May 20-22. Before the Sezer visit, incorrect reports
in the Turkish media that the U.S. had pressured Sezer not to
go fueled some anti-U.S. reactions. The GOT has given pro
forma support to UNSCR 1559.

Broader Middle East and North Africa Initiative (BMENAI)
--------------------------------------------- -----------

11. Turkey is a BMENAI partner, not a target country. As a
country that has recently undergone dramatic internal reform,
Turkey has much to offer countries in the earlier stages of
reform. Turkey, together with Italy and Yemen, is
co-sponsoring the Democracy Assistance Dialogue (DAD), a
major BMENAI component designed to coordinate the efforts of
governments and NGOs to promote democracy and good
governance. The Turks are hosting the first major DAD event,
a June conference in Istanbul focusing on the role of women
in society.

12. Much of the Turkish public believes conspiracy theories
that BMENAI is a U.S. plot to control Middle East oil and
turn Turkey into a "moderate Islamic state" which would then
serve as a "model" for the region. However, by desisting
from calling Turkey a "moderate Islamic state" or a "model",
we have overcome initial official doubts about the initiative
and forged a solid working relationship with the Ministry of
Foreign Affairs on BMENAI.

Turkey and the EU
-----------------

13. Turkey's European Union (EU) candidacy appeared to be on
track when the EU at the December 17 Summit agreed to open
accession talks with Turkey in October of this year.
However, events since the Summit have clouded the picture.
When representatives of the EU Troika visited Turkey in
March, they were disappointed to discover that Turkish
leaders had no plan for enacting new human rights-related
legislative reform. Moreover, the Troika visit was marred by
the violent crackdown by Istanbul police on International
Women's Day protesters. Turkish officials angered EU
representatives with public statements implying that police
were innocent and claiming that similar incidents take place
in EU countries. The Turkish Government has yet to name a
lead EU negotiator or to organize the bureaucracy in
preparation for the process of adopting the 80,000-page EU
common practices The EU, for its part, has delayed action on
Turkey's candidacy, largely to avoid influencing the May 29
French referendum on the EU Constitution.

Resurgent Turkish Nationalism and Religious Intolerance
--------------------------------------------- ----------

14. At the same time, Turkish nationalism is on the rise, as
demonstrated by the recent hysteria over an alleged attempt
by a group of Kurdish children to burn a Turkish flag.
During a recent visit to Norway, PM Erdogan said Western
powers are trying to divide Turkey. Hitler,s "Mein Kampf"
has risen to the top-10 on the bestseller lists of some of
the country,s major bookstore chains.

15. The Turkish Government,s Directorate of Religious
Affairs (Diyanet) is conducting a public campaign to
counteract what it prejudiciously calls the "threat" of
Christian missionaries. In March, the Diyanet drafted a
sermon comparing missionaries in Turkey today with the
soldiers of the Crusades and implying that Christians are
polytheists. The Diyanet distributed the sermon to mosques
across the country, where it was delivered by imams March 11
(Turkish imams are government employees who work for the
Diyanet). Officials from other government branches have
strongly supported the anti-missionary campaign, and some
Cabinet members have issued statements similar to the content
of the sermon.

16. We have seen no meaningful movement or even good will on
the part of the Turkish State or government to reopen the
Ecumenical Patriarchate's Halki seminary, closed since 1971,
on terms acceptable to the Patriarchate. By ostensibly
conditioning the reopening of Halki on reciprocal steps by
the Greek government toward Muslims living in Western Thrace,
our Turkish interlocutors are discriminating against Turkey's
own (Greek Orthodox) citizens by linking their interests to
the actions of a foreign government. Moreover, the Turkish
authorities refuse to acknowledge the ecumenical nature of
the Patriarchate and seem indifferent to the likelihood that,
if the Ecumenical Patriarchate can no longer survive in
Istanbul, its powers and authority will be claimed by Moscow.

Security relations on the Upswing
---------------------------------

17. Defense relations have traditionally been the strongest
aspect of our bilateral relationship, although they have
always had their ups and downs. One of the troughs was in
March 2003 when the Turkish Parliament voted against allowing
U.S. troops to enter northern Iraq from Turkey and the
following July when US forces arrested Turkish soldiers in
northern Iraq for plotting against a local mayor. The
successful June 2004 NATO Summit in Istanbul and President
Bush,s visit to Ankara put the relationship back on a
positive footing and military-to-military relations continued
to mend despite the Turkish military's frustration at our
lack of kinetic action against the PKK terrorist
organization's camps and leaders in northern Iraq and the
more general downturn in overall relations in late 2004 and
early 2005 due to the continued unpopularity of the coalition
effort in Iraq (over 95% of the population opposed the war)
and lack of Turkish leadership in defending our relationship.
In fact, it was the Deputy Chief of Defense, General Ilker
Basbug, who turned this general situation around by
expounding on the importance of Turkey's relations with the
U.S. despite some problems, at a nationally-televised press
conference on January 26.

18. Despite improving mil-mil relations, the diminished role
of the military in politics resulting from the EU accession
process has increased the role of elected officials in our
security relations. For example, a June 2004 request to
expand US operations at Incirlik Air Base through the
establishment of a cargo hub to serve Operation Enduring
Freedom (OEF) in Afghanistan and Operation Iraqi Freedom
(OIF) went unanswered for ten months; although we were able
to overcome military concerns about our proposed operations
relatively quickly, the GOT withheld approval until late last
month largely due to concerns about Turkish public opinion.
Ongoing discussions on establishing a Weapons Training
Deployment program at Incirlik, in which F-16s would be
temporarily based there on a rotating basis for training
purposes, should avoid this problem as Ankara has already
determined that this is consistent with existing agreements
and therefore does not require further government approval.

Defense Industry Cooperation Weak
---------------------------------

19. While mil-mil relations are improving, our defense
industry relationship is declining. Turkey has historically
preferred US military equipment for NATO and US
interoperability reasons and in April 2005 signed a $1B
Foreign Military Sale agreement to upgrade Turkey,s F-16
fleet; Lockheed Martin will perform the work on behalf of the
USG. However, no US firm has won a significant commercially
competed defense contract since Boeing was awarded a contract
in 2002 for Air Early Warning and Control (AEW&C) aircraft.
In 2004, three tenders (UAVs, Main Battle Tanks, ATAK --
attack helicopter) were cancelled. Bell Helicopter, which
had won the original ATAK tender in 1997, lost it when the
Turkey cancelled the tender due to Bell,s inability to
commit to significant technology transfer. The tender was
reissued in Feb. 2005 under onerous Terms and Conditions
requiring significant technology transfer and heavy liability
clauses. Bell Helicopter withdrew from competition and
Boeing threatened the same. In an attempt to ensure US
participation, Turkey revised the tender to reduce some
liability requirements and reissued it on May 18. Boeing is
reviewing the changes but remains unconvinced the terms will
be revised enough to allow its participation.

20. General Atomics Aviation lost the re-issued UAV tender
(re-issued in Nov. 2004) to an Israeli firm when it could not
confirm its ability upfront to transfer significant
technology. Sikorsky Helicopter has been negotiating terms
for a $400M sale of 12 Seahawk helicopters for three years.
The sale relies on an extending an existing EXIM facility
that had been extended previously and will run out in 2011.
EXIM, however, has made clear to Sikorsky that a second
extension is unlikely. The one potential bright spot is
Turkey,s Level III participation in the Joint Strike Fighter
(F-35) program. Turkey pledged to buy around 100 planes.
However, it has requested significant ($5B) local procurement.

Partner in GWOT
---------------

21. Turkey has provided valuable assistance and cooperation
to the global war on terrorism (GWOT). Ankara offered to
send peacekeeping troops to Iraq in October 2003 (an offer
Iraq declined), approved the use of Incirlik Air Base for
tankers to refuel aircraft on support missions for both OEF
and OIF, authorized the transit of US troops on rotation from
Iraq, and permits the transit of fuel, coalition supplies and
humanitarian goods (from OIF's inception until the end of
CY04, over USD 2.5 billion in coalition sustainment and
humanitarian assistance, or about 25% of all sustainment and
66% of humanitarian fuel shipments to Iraq.) In April 2005,
the GOT granted the US permission to establish a cargo hub at
Incirlik; operations are expected to begin in June. By
moving cargo operations closer to Afghanistan and Iraq, 6 US
military C-17 aircraft will be able to move the amount of
cargo it currently takes 9-10 military aircraft to move from
Germany. Turkey fully and publicly supported the
participation of all Iraqis in the Jan. 30 elections and
remains active in reconstruction efforts, including providing
electricity for Iraq, and training in Turkey for Iraqi
diplomats and (as its contribution to the NATO training
mission) Iraqi Security Forces. Turkey took command of the
International Security Assistance Force (ISAF) VII in
Afghanistan in February 2005 for a six-month period, during
which time it will contribute over 1,600 troops.

22. Beyond Afghanistan and Iraq, the US and Turkey coordinate
military assistance to Georgia and Azerbaijan, improving
their abilities to protect important energy transport routes.
Turkey subscribes to every arms control arrangement it is
eligible to join, including the Proliferation Security
Initiative (PSI). Ankara has also been supportive of
international efforts to press Iran to meet its commitments
to the IAEA, fully backing the EU-3 dialogue.

23. The Turkish military's Partnership for Peace Training
(PFP) Center provides counterterrorism and other training to
personnel from PfP partner countries. The military is
establishing a NATO Center of Excellence-Defense Against
Terrorism that will provide more specialized training
opportunities for both NATO partner nations, Allies and,
under NATO's Iraq training mission, potentially Iraqis as
well.

24. Although an ally in the war on terrorism, Turkey's regime
to combat terrorist financing remains weak; terrorist
financing is not explicitly criminalized and Turkey is not
yet in compliance with OECD Financial Action Task Force
(FATF) terrorism finance recommendations. Although the Turks
are in the process of bringing their laws into compliance,
there has been no sense of urgency or strong leadership at
senior levels. Aside from the weak legal regime, enforcement
is hampered by a lack of expertise and inadequate interagency
and international coordination.

Iraq-Turkey: Generally Better News, but PKK Still Looms Large
--------------------------------------------- ----------------

25. Iraq has generally dominated our agenda with Turkey since
2003. Our operations in Iraq remain extremely unpopular and
represent a significant damper on our bilateral relations.
GOT leaders stood by while the irresponsible Turkish press
carried outrageous coverage of counter-insurgency operations
in Iraq, culminating with the Fallujah operation in November
2004; papers here "reported" on U.S. use of WMD and mass
rape. The head of parliament,s human rights committee,
Mehmet Elkatmis, accused the U.S. of carrying out a genocide
worse than Hitler,s. Turkish concerns about the aspirations
of the Iraqi Kurds led both the press (and some Turkish
officials) to accuse us of conspiring to hand over Kirkuk to
the Kurds, after which they could use the oil-rich province
as the economic and political base for an independent Kurdish
state.

26. Since the Jan. 30 election, Turkey has stepped up its
political support for Iraq. The GOT has accelerated its
training efforts for Iraqis and issued increasingly positive
statements offering crucial political support for the ITG and
the constitutional process. (NOTE: The future of Kirkuk and
the continuing PKK terrorist presence remain sensitive
issues, however. END NOTE.) Perhaps taking its cue from GOT
leaders, the sniping in the Turkish press on Iraq has gone
down considerably in recent months.

27. These positive developments aside, Turks are angry that
the coalition has failed to take any kinetic action against
the PKK terrorist organization, a violent, Marxist-Leninist
Kurdish nationalist group that Turkey has fought since the
1980s. The Turks will tell you that over 30,000 people have
died as a result of PKK terrorism. PKK's leadership and
command and control are based in northern Iraq and operate
there essentially unimpeded. We have told the Turks that we
are committed to dealing with the PKK, but that the
insurgency has simply not allowed us to devote the resources
necessary to a military operation.

Economy
-------

28. The Turkish economy is recovering from the sharp
financial crisis of 2001 thanks to the implementation of some
structural reforms -- such as the creation of an independent
central bank, cutbacks in government spending, and bank
regulatory reform -- as well as strong inflows of emerging
market portfolio investment. GDP grew 8.9% last year and
should grow at least 5% this year, while inflation is
currently below 10% and declining. The depth of Turkey's
financial problems and the partial implementation of reforms
leave the country vulnerable to a change in global market
sentiment that could be triggered either by domestic
developments or a rise in U.S. and global interest rates. A
large current account deficit (over %5 of GDP) is financed
largely by short-term inflows. Foreign direct investment has
not materialized as a stable source of financing or growth,
primarily due to the opaque legal and regulatory environment.

29. The benefits of growth are not being felt by average
Turks. Annual income per person is currently about $4000 per
year. The current official rate of unemployment is
approximately 10% (there is widespread underemployment) and
deep poverty is widespread, particularly in urban sprawl and
rural areas. Given the young population (30% is below the
age of 15), generating sustained growth is critical for
Turkey to raise incomes and maintain political and economic
stability. Unfortunately, the structural reforms necessary
to sustain such rates of growth have been slow in coming.
The privatization program has been disappointing, and the
share of unregistered (and untaxed) activity in total GDP is
estimated at 40-60%. Some of these issues are being
addressed through active IMF and World Bank programs. The
IMF recently approved a new three-year, $10 billion program
after prolonged government foot-dragging and the World Bank's
loan portfolio totals $4.3 billion. The EU accession process
will also entail reforms, but the most difficult ones will be
delayed and will also entail large costs, such as for
upgrades needed to meet EU environmental standards.

30. In large part because of the slowness of reforms and the
unwelcoming legal environment, economic relations with the
United States are not commensurate with Turkey's economic
size or potential. Understandably, Turkey has given a
priority to developing economic relations with EU countries.
However, the U.S. share of Turkey's imports declined from
7.6% in 1999 to 3.5% ($3.4 billion) in 2004. The largest
U.S. export category is $500 million in raw cotton that is
transformed into textiles for export to Europe and the U.S.
Other leading U.S. exports are machinery, chemicals, and
scrap metals. Total U.S. investment is paltry: approximately
$2 billion, concentrated in the food products, banking and
automotive sectors. The highest profile U.S. companies are
Coca Cola, Citibank, Pepsi, Cargill and Ford, which has a
successful joint venture with a leading Turkish firm
producing light trucks for domestic use and export to Europe.
A track record of high-profile disputes involving arbitrary
Turkish court rulings and Turkish defaults on contracts has
deterred greater investment. Approximately $1 billion in
Turkish imports entered the United States under the
Generalized System of Preferences (GSP) program in 2004.

31. Turkey has sought the creation of "Qualifying Industrial
Zones" under the U.S.-Israel Free Trade Agreement that would
allow for duty and quota free export to the U.S. of products
containing a minimum share of Israeli input. However, the
Turkish government's insistence that such QIZs include
textile products -- and the opposition of U.S. textile
producers and negative lobbying of Congress by the Turkish
Exporters Chamber-- blocked progress on this initiative,
which would require legislative action. At the same time,
Turkey was recently confirmed on USTR's Special 301 "Priority
Watch List" for deficiencies in its protection of
intellectual property, especially for confidential testing
data used by pharmaceutical companies to obtain marketing
approval for drug products.

32. We also have serious issues over market access for U.S.
agricultural products, including rice and breeding cattle, as
well as a potentially restrictive biotechnology law being
considered by the Turkish parliament. Turkey plays a key
role in ensuring global energy security. The 1.5 mbd
Baku-Tblisi-Ceyhan pipeline should be completed later this
year, and approximately 3 million barrels flows through the
congested and environmentally sensitive Turkish Straits every
day. Turkey imports nearly all of its domestic energy
supplies, including large quantities of natural gas from
Russia and Iran. It recently announced plans to develop
nuclear generating capacity, but it is not clear how this
would be financed.

EDELMAN

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