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Cablegate: Turkey: Scenesetter for Codel Specter, August

VZCZCXRO2070
OO RUEHLN
DE RUEHAK #2120/01 2281411
ZNR UUUUU ZZH
O 161411Z AUG 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3431
INFO RUEHHE/AMEMBASSY HELSINKI PRIORITY 0235
RUEHLO/AMEMBASSY LONDON PRIORITY 3188
RUEHRL/AMEMBASSY BERLIN 4259
RUEHBS/AMEMBASSY BRUSSELS 6071
RUEHMO/AMEMBASSY MOSCOW 5573
RUEHFR/AMEMBASSY PARIS 5415
RUEHRO/AMEMBASSY ROME 6675
RUEHWR/AMEMBASSY WARSAW 0249
RUEHFT/AMCONSUL FRANKFURT 4182
RUEHIT/AMCONSUL ISTANBUL 3182
RUEHLN/AMCONSUL ST PETERSBURG 0057

UNCLAS SECTION 01 OF 04 ANKARA 002120

SIPDIS

SENSITIVE
SIPDIS

PLEASE PASS TO SENATOR SPECTER

E.O. 12958: N/A
TAGS: AM ECON ENRG IZ OREP PGOV PINS PTER TU
SUBJECT: TURKEY: SCENESETTER FOR CODEL SPECTER, AUGUST
24-26, 2007

REF: A. STATE 113788
B. STATE 104534

1. (SBU) Summary: The new parliament is in the midst of
electing Turkey,s next president, following general
elections in July. The ruling Justice and Development Party
(AKP) scored a significant victory, returning with a mandate
to pursue its economic and political reform policies. On
Iraq, Turkey continues to be an essential partner, supporting
coalition forces by allowing use of its territory as
logistical hub. The single biggest obstacle to bilateral
relations is PKK terrorism. Turkey has repeatedly expressed
impatience at the lack of U.S. action against PKK terrorists
in northern Iraq and has threatened to strike at PKK targets
across the border if the U.S. or Iraq does not act. Senior
officials are also concerned that a U.S. Congressional
Armenian genocide resolution (AGR) could spark a negative
response among the Turkish public, which would likely
complicate the bilateral relationship, affect U.S. national
security interests, and work against those seeking a
collaborative approach to the events of 1915. Turkey has
achieved five years of GDP growth averaging over 7% -- the
highest rate of any OECD country. Because of its strategic
location, Turkey aspires to increase its role as an energy
transit country by piping natural gas to meet Europe's
growing needs, and will soon begin transporting gas from
Azerbaijan to Greece. End summary.

NEW PARLIAMENT, NEW PRESIDENT

2. (U) Turkey's new parliament is expected to elect the
country's eleventh president on August 28, on the third round
of voting. FM Abdullah Gul formally declared his candidacy
on August 14 and is widely expected to win. It has been a
contentious process, with many preferring a consensus
candidate rather than Gul. The new parliament convened on
August 4 and MPs elected a widely respected moderate
conservative as Speaker. AKP,s strong showing in the July
elections, with 46.6% of the vote, surprised many Turks. Two
other parties crossed the ten percent election threshold
required to enter parliament, along with 27 independent
candidates, creating a fractious if more representative
legislature. AKP, with 341 of parliament's 550 seats, holds
a reduced majority, short of the 367 seats needed to amend
Turkey's military-drafted 1982 constitution. The
nominally-left opposition Republican People's Party (CHP),
with 21% of the vote, lost a substantial number of seats (98,
down from 152 in 2002), in part due to a third party, the
right-wing Nationalist Action Party (MHP), entering
parliament with 70 seats. Twenty of the 27 independents are
affiliated with the pro-Kurdish Democratic Society Party
(DTP). Commentators view the results as the opposition's
failure as much as AKP's success, but the results gave AKP
the opportunity to pursue its economic development and
modernization policies, EU membership process and political
reform for another term.

IRAQ/PKK

3. (SBU) For over 20 years, the PKK has conducted a terrorist
campaign that has resulted in the deaths of over 35,000
Turks. Since the end of its self-imposed five-year
cease-fire in 2004, the PKK has conducted attacks against
Turkey from strongholds in northern Iraq, killing over 600
Turks (civilians and military) and foreigners in 2006 alone,
and over 100 so far in 2007. The increased violence prompted
the government and military to warn of possible cross-border
operations into Iraq. The USG has strongly discouraged this,
citing Iraqi sovereignty and the risk of increased
instability. The United States has been Turkey's closest
ally in the fight against the PKK, securing EU agreement to
place the PKK on its list of terrorist organizations;
spear-heading a Europe-wide effort to close PKK financial,
logistical, and media support outlets there; and leading a
trilateral (U.S./Turkey/Iraq) process to stop the threat
emanating from northern Iraq.

4. (SBU) Iraq remains a major concern for Turkey. Turkey

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worries about increasing instability in Iraq, growing Iranian
influence in the region, and the potential for Iraq to
splinter along sectarian or ethnic lines. The GOT is also
concerned about Iraqi Kurdish ambitions to expand their
territory to include oil-rich Kirkuk. The prospect of a
referendum later this year on the future status of Kirkuk
exacerbates Turkish fears that a Kurdish annexation of the
province will lead to massive inter-communal violence, and,
ultimately, the dissolution of the country. Turkish
political leaders have sought to reinforce Iraq's unity and
territorial integrity, and have been among the most active of
Iraq's neighbors in the Iraq Neighbors Process.

5. (SBU) Turkey's agreement to the use of its territory as a
logistical hub has been a combat multiplier for our Iraq
operations. Approximately three million gallons per day of
gasoline and diesel fuel for the Iraqi people and 25% of
sustainment fuel for coalition forces crosses into Iraq
through the Ground Line of Communication at Habur Border
Gate. Since May 2005, when Turkey approved the use of
Incirlik Air Base as a cargo hub to support coalition
operations in Iraq, over 152 million pounds of equipment have
been shipped to U.S. troops. Over 50% of all air cargo into
Iraq has transited the Incirlik cargo hub.

EU ACCESSION

6. (U) A double-election year contributed to the GOT's
failure to enact reform on several high-profile political
issues, such as Turkish Penal Code Article 301 (insulting
"Turkishness"), even while technical-level EU harmonization
continued. The EU's June 26 decision to open negotiations on
two chapters (Statistics and Financial Control) but not an
expected third (Economic and Monetary Union) left Turkish
officials frustrated and concerned that the EU's fall annual
progress report could recommend suspension of additional
chapters. The Turkish public, meanwhile, has grown
increasingly skeptical of the EU venture, in large part as a
reaction to Euro-skepticism of Turkey, reflected most notably
by French President Nikolas Sarkozy's preference of a
"privileged partnership" vice full membership. AKP, as
historically the party most committed to Turkey's EU
membership, now has the chance to use its electoral mandate
to breathe new life into the process.

JUDICIAL REFORM

7. (U) Turkey continues work to harmonize and reform its
judicial system in its bid to join the EU. Turkey has
improved the timeliness and efficiency of civil prosecutions,
and developed more uniform sentencing guidelines in criminal
cases. In the last five years, Turkey created 21
intellectual property courts in large cities countrywide for
effective prosecution of IPR violators. Another planned
improvement is automation of all judiciary rulings for use by
law enforcement agencies, prosecutors, and judges, which is
scheduled for completion in 2008. A key focus of the Embassy
has been Turkey,s prosecution of terrorism financiers and
adherence to United Nations Security Council Resolutions. To
that end, in 2006, the Department of Justice stationed a
resident Regional Legal Adviser here. The RLA works closely
with Turkish judicial authorities to provide training and
information. The Embassy also works to increase European law
enforcement focus on the PKK as an organized crime problem.
For example, in January 2007, RLA hosted a roundtable for
Turkish, French, Dutch, and British prosecutors to discuss
methods to investigate and prosecute terrorist organizations,
particularly the PKK.

HOUSE RESOLUTION ON ARMENIAN GENOCIDE

8. (SBU) The USG has worked hard to encourage a candid
discussion in Turkey of the tragedy suffered by ethnic
Armenians during World War I. The Turkish and Armenian
governments have discussed establishing joint experts
commissions to establish the facts, in parallel with efforts
to reestablish official bilateral relations. Turkey,s
public would react strongly to a Congressional resolution

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labeling this tragedy a "genocide", which would also work
against those calling for a comprehensive examination and
normalized Turkish-Armenian relations.

9. (SBU) A resolution would drive increased anti-Americanism,
which could have a negative impact on U.S. national interests
in Iraq and elsewhere. Supply routes crucial to supporting
U.S. troops, military overflights and use of Turkish bases
that support U.S. military operations in Iraq and Afghanistan
could be jeopardized. Major defense procurement contracts
with U.S. manufacturers (with expected and potential sales
exceeding $10 billion) could be scrapped. Agricultural
purchases might also be canceled and consumer boycotts could
ensue. Anti-Americanism in Turkey would likely intensify,
with a negative impact on U.S. citizens and USG personnel
living and working in Turkey.

MACRO-ECONOMIC PICTURE

10. (SBU) The Turkish economy has recovered strongly from the
2001 financial crisis, having achieved five years of GDP
growth averaging over 7% -- the highest rate of any OECD
country. In dollar terms, per capita GDP doubled to $5,482 in
2006. Since 2004, for the first time since the early 1970's,
inflation has been in single digits. At the same time,
Turkey has stabilized its economy and reduced its
vulnerability to financial problems, with net public sector
debt to GDP falling from 90% in 2001 to 45% in 2006. Turkey
achieved this through its IMF-sponsored economic program,
including a 6.5% primary surplus target for the public sector
and orthodox, pro-investor, pro-market policies. Despite
this improved situation,
Turkey remains somewhat vulnerable to negative global market
sentiment because of Turkey's large current account deficit
(8% of GDP in 2006), the public sector's continued reliance
on foreign portfolio investors rolling over mostly short-term
debt, and risks of political or regional instability.

ENERGY ISSUES

11. (U) Turkey imports nearly all of its oil and natural gas.
However, Turkey's strategic location, between Europe and the
Middle East and Caspian regions, makes Turkey an important
energy transit country. More than three million bbl of
Caspian oil pass every day through the Bosphorus Straits, and
nearly one million bbl/d of oil pass through the
Baku-Tbilisi-Ceyhan (BTC) pipeline, the first pipeline for
Caspian oil that does not cross Russian soil. Turkey aspires
to increase its role as an energy transit country by piping
natural gas to meet Europe's growing needs. It will soon
begin transporting gas from Azerbaijan to Greece -- the first
time Europe will receive Caspian gas via a non-Russian route.
Turkey also aspires to construct the larger Nabucco pipeline
to deliver natural gas across Turkey to Austria. The USG
supports Nabucco, but only if it is filled with non-Iranian
gas from Azerbaijan, Turkmenistan, Kazakhstan and possibly
Iraq. Recent Russian announcements that reinforce its hold
on Turkmen gas and bypass Turkey to sell gas to Italy spurred
Turkey to announce a preliminary MOU with Iran on a future
gas deal, which we have protested.

TRADE

12. (SBU) With two-way bilateral trade around $10 billion,
roughly in balance between exports and imports, the U.S. is
an important trading partner for Turkey. However, about half
of Turkey's trade is with the EU, and Turkish trade with the
Middle East, African and Former Soviet Union countries is
growing. As Turkey's total trade volume -- both exports and
imports -- grows, the U.S. share in Turkey's trade is
declining.

13. (SBU) Deepening bilateral economic and business ties is a
key priority of the Shared Vision and Structured Dialogue
announced by Secretary Rice and Foreign Minister Gul in July
2006. To help catalyze closer economic ties, the U.S. and
Turkey held a meeting of the bilateral Economic Partnership
Commission (EPC) in February, 2007, co-chaired by the Under

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Secretary of the Turkish Foreign Ministry and State

SIPDIS
Department Assistant Secretary for Economic, Energy and
Business Affairs Daniel Sullivan. The EPC laid out an action
plan that both sides are working to implement.

MISSION TURKEY

14. (SBU) Mission Turkey consists of four posts: Embassy
Ankara, Consulate General Istanbul, Consulate Adana, and a
two-person Consular Agency in Izmir. Country-wide, there are
currently about 300 American positions and almost 700 locally
employed staff (LES) working for over 20 agencies throughout
the Mission. The Mission's FY 2007 operating budget was $30
million. Mission Turkey is scheduled for a New Embassy
Compound (NEC), with construction set to begin in 2010.

Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/

MCELDOWNEY

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