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Cablegate: Gmac/Dillingham Update

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

UNCLAS ANKARA 003357

SIPDIS

USDOC FOR ADVOCACY CENTER AND DEFALCO
TREASURY FOR OASIA - CHRIS PLANTIER
PASS OPIC FOR ROSS CONNELLY

SENSITIVE

E.O. 12958: N/A
TAGS: BEXP EFIN EINV TU OPIC
SUBJECT: GMAC/DILLINGHAM UPDATE

1. (SBU) On June 1, ECON/C raised GMAC/Dillingham's
problems in completing the long-delayed Izmir Ring Road
project with Under Secretary Ibrahim Canakci, the head
of the Turkish Treasury who reports directly to State
Minister Ali Babacan. Canakci was familiar with the
letter sent by OPIC VP Ross Connelly to Deputy Prime
Minister Sener, as well as with Ambassador Edelman's
letters to Babacan and Finance Minister Unakitan.
Canakci said he had staffed the letter and the issue
out for detailed study in the Treasury.

2. (SBU) Canakci said that there were numerous
projects to which the GOT had committed itself before
the financial crisis that it was simply no longer able
to fund consistently with sound fiscal policy. He said
the size of the overall budget allocated for government
investment (capital spending) projects was set by the
GOT within the parameters agreed with the IMFTreasury,
and that it was the responsibility of the State
Planning Office (SPO) to set priorities within this
envelope. Also, it was the responsibility of the
Treasury to determine whether or not to draw on the
offshore loan established to help fund the ring road
project.

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3. (SBU) At the same time, Canakci understood that if
the inability of the GOT to allocate sufficient funds
to the project led to a situation in which
GMAC/Dillingham was unable to perform its contractual
responsibilities, it would seem unfair for the State
Highway Department to call the OPIC-insured performance
bond issued by GMAC/Dillingham and its Turkish joint
venture partner. However, he said that the legalities
would depend on the precise terms of the contract
between the Highway Department and GMAC/Dillingham, as
well as on the contract between GMAC/Dillingham and
OPIC. ECON/C stressed that especially in the wake of
PM Erdogan's visit to Washington, we were hopefully in
the process of cleaning up old investment and
commercial disputes and that we hoped to avoid any new
negatives -- understanding that it was the government
of Turkey's responsibility to set its budget
priorities. Canakci agreed and promised to stay in
touch on the subject.

4. (SBU) Comment: The constraints of sound fiscal
policy -- which we support bilaterally as well as
through the IMF program -- are genuine. The GOT may
simply not be able to prioritize this project at this
time, whatever the on-the-ground need for a new road in
Izmir. However, Canakci's personal knowledge of the
case shows that we have succeeded in getting the GOT to
pay attention at senior levels to the issue and to the
USG interest in its equitable and amicable resolution.
EDELMAN

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