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Cablegate: Turkey: Hatay Business Leaders Sanguine On Increasing

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TAGS: ECON ETRD PREL SY
SUBJECT: TURKEY: HATAY BUSINESS LEADERS SANGUINE ON INCREASING
TURKISH-SYRIAN TRADE AND CONTACTS

1. (U) SUMMARY. Prominent members of Hatay's business
community are hopeful about increasing trade and commerce with
Syria through the province's two border gates. Syria's recent
reduction of a border fuel tax augers well for improved trade
conditions for Turkish transporters, although truck convoy rules
still impede what could be a steadier flow of Turkish goods over
the border. Women's business associations are also growing
stronger, with a Turkish-Syria Women's Fair in the works for May
2009. Through AKP's diplomatic initiatives and more positive
media portrayals of Syria, Turks have warmed to their southern
neighbor. END SUMMARY.

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BUSINESS WITH SYRIA STILL BRISK FOR HATAY TRUCKERS

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2. (U) Business leaders in Hatay province (flanked by Syria on
the east and the Mediterranean sea on the west) hope that
Turkey-Syria trade volume will reach $5 billion annually by
2012, up from $1.2 billion recorded in 2007. While regionally
Gaziantep enjoys a large piece of that figure ($103 million in
the first 9 months of 2008), Antakya Chamber of Commerce
President Hikmet Cincin said Hatay has the second largest truck
fleet in Turkey and is poised to take greater advantage of the
Turkey-Syria Free Trade Agreement that came into force in 2006.
Suleyman Ustun, owner of a local ground transportation company,
told us despite the global financial crisis, business was
booming for him. Ustun said his firm trucks over the province's
two border gates products such as cotton and synthetic yarns,
chemicals, cement and soil products, vegetable oils, machinery,
and spare parts. His vehicles come back largely empty, however,
save for the maximum 200 liters of diesel drivers can purchase
in Syria as the country has little in the way of exports suited
for Turkey. Ustun said while the idea of importing more fuel
for resale in Turkey is attractive, Syrian law offers a stiff
penalty of six years imprisonment designed to deter would-be
violators.

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SYRIAN FUEL LEVY RECENTLY REDUCED

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3. (SBU) Ustun said up until a few weeks ago, business was
dampened by the Syrian-imposed "diesel fuel tax" of $400-600
that truckers paid per vehicle at the gate. This fuel tax was
levied to prevent trucks from taking advantage of the heavily
subsidized and cheaper fuel rates in Syria -- some 85% cheaper
for diesel. This tax was recently lowered to $100-200 to
promote brisker business. According to Ustun, the warm
relationship between PM Erdogan and Syrian President Bashar
al-Assad can't be discounted in the recent adjustment in the
border tax. He believes during their recent vacation together
in the Turkish resort of Bodrum, Erdogan likely conveyed
complaints of Turkish business owners and al-Assad obliged him
with the quick reduction. Although this particular hasty
development was positive, Ustun communicated the frustrations of
doing business with a dictatorship in which rules changes as
quickly as the wind, with no warning or phased-in introduction.

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CONVOY REQUIREMENT HAMPERS BUSINESS

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4. (SBU) Pointing to another vestige of a paranoiac
totalitarian regime, Ustun said there is a convey requirement
for Turkish truckers. That is to say, Turkish trucks are
allowed through Hatay's two border gates (Cilvegozu and
Yayladagi) with Syria only in a convoy grouping twice a day - a
two-hour window in the afternoon followed by a two-hour window
at night. This allows the vehicles to be trailed by Syrian
intelligence for the balance of their business dealings in the

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country. Timing and logistics take on a new importance because
of this constraint, said Ustun. Cincin pointed out how
cumbersome this obligation was and said truckers who miss the
time window must spend another 18 hours at the gate or waste
expensive fuel motoring back to their hubs.

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THE HATAY-GAZIANTEP SHOW-DOWN

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5. (SBU) Since Syria doesn't export much in the way of goods
(mostly confections to Russian and olive oil to France), Cincin
said their main challenge is promotion of Hatay province to
attract Syrian tourists. Cincin believes Syria's diverse
populations should be attracted to Antakya with its historical
convergence of three religions, Judaism, Christianity, and
Islam. Their main rival, however, is Gaziantep, a bustling
commercial hub with the greatest percentage of export goods to
Syria and the site of the country's only Syrian Consulate.
Gaziantep vendors also display rugs bearing the visage of
al-Assad, hoping to appeal to patriotic Syrian tourists. Cincin
said his Chamber had recently applied to the Turkish Ministry of
Transportation for a no-visa system between Hatay province and
the Syrian cities of Lattakia and Aleppo, akin to the
arrangement between Trabzon and Batumi, Georgia.

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NEIGHBORLY EXCHANGES WARMING

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6. (SBU) Over the past year, news reports in southeast Turkish
media have highlighted the ongoing cultural and business
exchanges between Turks and Syrians. The Aleppo symphony comes
frequently to Turkey, and the Antakya choir has performed there;
business conferences are held in Gaziantep and Mersin; Syrians
seek medical treatment in Gaziantep and vacation in the eastern
Mediterranean. Recently the Women Entrepreneurs Association of
Hatay, led by President Yasemin Mistikoglu, sent a group of 54
Turkish businesswomen to Syria for bilateral talks. Mistikoglu
said Turkish and Syrian businesswomen have a lot of experience
to share because they live in neighboring countries. Right now
the dialogue is just starting, she said, but plans are underway
to hold a Turkish-Syria Women's Business Fair in Ankara in May
2009 that will focus on textiles and jewelry.

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COMMENT

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7. (SBU) Turkish officials and business leaders with whom
we've spoken are optimistic about the opportunities Syria offers
in traditional export sectors as well as alternative energy and
construction. Conspicuously absent is the guarded, slightly
condescending and arms-length attitude that infused
conversations about their southern Arab neighbors only a decade
ago. No doubt increasingly positive media portrayals have
played a role in changing public perceptions, as have personal
diplomacy initiatives under the AKP government. But, where
money is to be made, the spirit of Turkish entrepreneurship will
closely follow. END COMMENT.
GREEN

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