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Cablegate: Labor Upset That Got Will Use Unemployment Funds

VZCZCXYZ0006
PP RUEHWEB

DE RUEHAK #1512 2931612
ZNR UUUUU ZZH (CCY ADC841AA MSI1787-695)
P 201612Z OCT 09
FM AMEMBASSY ANKARA
TO SECSTATE WASHDC PRIORITY 1012

UNCLAS ANKARA 001512

SENSITIVE
SIPDIS
C O R R E C T E D COPY CAPTION
DEPARTMENT FOR DRL/ILCSR MMITTELHAUSER

E.O. 12958: N/A
TAGS: PGOV ELAB TU
SUBJECT: LABOR UPSET THAT GOT WILL USE UNEMPLOYMENT FUNDS
FOR INFRASTRUCTURE PROJECTS

REF: A. ANKARA 1475
B. ANKARA 1468

1. (U) Summary. The Government of Turkey passed a law last
August that will allow it to dip into a fund for unemployment
insurance and transfer payments for "infrastructure
development" projects, primarily in the Southeast. The law
is unpopular with labor unionists because while the fund is
not public and is mostly made up of employee and employer
contributions, it is being used by the GOT as an unofficial
line of credit. The GOT's need to draw on this low-hanging
fruit may be a sign that they are running out of public
sources to spend their way into pre-election favor. End
Summary.

2. (U) On August 17, President Gul approved a law which,
among other things, will permit the government to use 75
percent of the profits turned over by the unemployment
insurance fund in 2009 to put towards "infrastructure
investment" projects, predominantly in the southeast of
Turkey (such as the Guneydogu Anadolu Kalkinma Projesi, or
GAP). According to the Ministry of Finance, this translates
into a loan of TL 4.5 billion (approximately $3.1 billion, at
today's rates). The law stipulates that 75 percent of the
sum will be repaid in 2010, and the remaining 25 percent will
be repaid over 2011-2012. Each year's market rates will
determine the interest rate for repayment of the sum.

3. (U) This law has generally upset labor confederation
officials. Labor Attache met with the heads of the Turk-Is,
Hak-Is, TESK and DISK confederations to discuss the law. The
confederations said they consulted with the GOT to express
their concerns about the law when it was being considered,
but that they were unable to secure amendments to the draft
that would have addressed those concerns. The confederations
agreed among themselves that the new law is a salient issue
because the fund itself is not public. The fund was created
by contributions from workers (25 percent), employers (50
percent) and the state (25 percent) with the purpose of
helping people when they are unemployed. However, with
singlehanded passage of the law -- and without taking unions'
wishes into consideration -- it is being handled by the
government as a public fund that can be used for short-term
fiscal relief with no accountability.

4. (U) In addition, since the purpose of the fund is to help
those who are unemployed, the confederations are concerned
that the GOT's decision to put the money towards
"infrastructure investment" projects would not target the
beneficiaries for which the fund was created. When Labor
Attache met with Is-Kur, the State Employment office, its
director assured her that the projects that were to be
targeted by these funds were supposed to generate employment
in the GAP area. The State Planning Office of the Prime
Ministry further elaborated that the GAP region will have
prominence, but the East, North, and Eastern Black Sea
Development Projects also will be considered.

5. (SBU) The TESK confederation president said he was so
disappointed in the law that TESK was going to approach
like-minded parliamentary representatives from the Republican
People's Party (CHP) to see if they would agree to approach
the Constitutional Court to review the law and possibly
strike it down.

6. (U) Comment. While the State Planning Office of the Prime
Ministry said that 2.64 million TL has been withdrawn
already, no projects have been identified to receive funding.
According to the law, the funds to be used will have to be
appropriated by the end of this calendar year, and unused
funds must be returned. Media sources have speculated that
the GOT is trying to use the money to further its goals for
the Democratic Opening initiative (reftels), or possibly to
influence public opinion -- especially in the Southeast -- in
the run-up to possible early elections in 2010.

JEFFREY

"Visit Ankara's Classified Web Site at http://www.intelink.s
gov.gov/wiki/Portal:Turkey"

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