Identifier
Created
Classification
Origin
02ANKARA8780
2002-12-03 06:35:00
CONFIDENTIAL
Embassy Ankara
Cable title:  

AMBASSADOR DISCUSSES ECONOMICS WITH DEPUTY PM SENER

Tags:  ECON EFIN PGOV PREL TU 
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C O N F I D E N T I A L ANKARA 008780 

SIPDIS


TREASURY FOR OASIA - MILLS
USDOC FOR ITA/MAC/DDEFALCO
NSC FOR QUANRUD AND BRYZA


E.O. 12958: DECL: 12/02/2007
TAGS: ECON EFIN PGOV PREL TU
SUBJECT: AMBASSADOR DISCUSSES ECONOMICS WITH DEPUTY PM SENER


Classified by Ambassador W. Robert Pearson. Reasons:
1.5(b,d).


C O N F I D E N T I A L ANKARA 008780

SIPDIS


TREASURY FOR OASIA - MILLS
USDOC FOR ITA/MAC/DDEFALCO
NSC FOR QUANRUD AND BRYZA


E.O. 12958: DECL: 12/02/2007
TAGS: ECON EFIN PGOV PREL TU
SUBJECT: AMBASSADOR DISCUSSES ECONOMICS WITH DEPUTY PM SENER


Classified by Ambassador W. Robert Pearson. Reasons:
1.5(b,d).



1. (C) Summary: In his initial call on Deputy PM Sener
December 2, Ambassador stressed that the USG wanted the
government's economic program to succeed, highlighted the
important role financial markets would play in the coming
months, and suggested those markets would be looking for a
strong primary budget surplus, privatization, further bank
reform, and continuation of a strong, independent bank
regulator. In his positive but very general response, Sener
said the GOT's top economic challenges were reducing
inflation and the public debt, indicated the government would
work within the existing IMF program, and stressed the need
for accelerated privatization. He called the primary surplus
"key," but did not mention a number; he also did not comment
on banking. Sener also gently noted concerns about the
economic impact of a possible Iraq operation. End Summary.



2. (C) Ambassador paid an initial call December 2 on Deputy
Prime Minister Abdullatif Sener, who is responsible for
economic issues and oversees (directly or indirectly) the
Privatization Administration and the Bank Regulatory and
Supervision Agency (BRSA).



3. (C) Ambassador said the USG wants the new government's
economic program to succeed, and also wants to support that
program. He noted that the government's most severe critic
would be investors, and urged the government -- as it
implements its program -- to keep its eye on the markets. By
next Spring, he noted, Turkey is likely to send its economic
team to London and New York to woo investors, and it will be
important that those investors like what the new government
will have done. They will be looking specifically for a
large primary surplus, further privatization, continued
banking reform, and maintenance of a strong, independent bank
regulatory agency.



4. (C) Sener responded that the new government had
inherited the problems of high inflation, a large public
debt, and volatile growth. It also inherited an economic
program worked out with the IMF. "From an economic point of
view, it is not wise to stop or radically change such a
program." In fact, Sener added, the existing program shares
the new government's goals of cutting inflation, reducing the
debt stock, and promoting sustainable growth. As a result,
the government's intent is to continue with the existing
program, while adding some details important to the AK Party.



5. (C) Sener called the primary surplus "key" to reducing
interest rates and the debt stock. Public sector reform is
also important. In that context, Sener said privatization
was important not only to generate revenues, but also to
increase economic efficiency. He complained that
privatization had largely stopped in the past two years, and
said the government would work to develop a good, rapid
privatization program for 2003. Sener predicted that the
suffering from the economic program would end soon, and
commented positively that the program gives more emphasis to
growth in the coming years.



6. (C) Sener noted that a group of Western business
executives who had visited him earlier in the day had asked
about the economic impact of a possible Iraq operation.
Ambassador responded that the USG hoped that the combination
of the UN resolution and strong international pressure would
convince the Iraqi regime to disarm without war. Should a
military operation be necessary, the USG would seek to
protect the Turkish economy (and the economic program) as
much as possible from the impact, while maintaining a close
dialogue with the GOT.



7. (C) Comment: Some of Sener's statements -- such as
noting the importance of the primary surplus, playing down
the social problems associated with the economic program, and
highlighting the congruence between AK's goals and those of
the current IMF program -- hint at a backing away from some
of AK's more troubling economic statements. On the other
hand, Sener did not address banking reform, which is a major
question mark now, and his comments were so general that they
left a lot of wiggle room.
PEARSON