TURKS RAISE ISSUE OF FUTURE TRADE WITH IRAQ

C O N F I D E N T I A L ANKARA 008932 SIPDIS STATE ALSO FOR E, EUR/SE AND EB/TPP TREASURY FOR OASIA - MILLS AND LECHTER STATE PASS USTR FOR NOVELLI/BIRDSEY E.O. 12958: DECL: 12/11/2012 TAGS: ETRD ECON PREL TU IZ SUBJECT: TURKS RAISE ISSUE OF FUTURE TRADE WITH IRAQ Classified by Charge d'Affaires Robert Deutsch. Reason: 1.5(b,d) ¶1. (C) Foreign Trade Under Secretary Tuncer Kayalar told us December 11 that, in the event of a military operation in Iraq, Turkey would seek USG and United Nations support for some kind of preferred trade status to enable it to re-start exports to Iraq quickly and on a large scale. He argued that such a status would help make up for the trade losses Turkey has suffered since 1991 and would expect to suffer in the event of a military operation. ¶2. (C) Kayalar was not clear on exactly what Turkey would be looking for, but suggested the UN could provide Turkey with preferred status that would enable it to export humanitarian goods during an operation (he mentioned Article 50 status in this context) and a broader range of goods and services after an operation. He explained that the GOT assumed some kind of international authority would control a post-operation Iraq for a lengthy period, and would be able to -- in effect -- direct contracts to Turkey. ¶3. (C) Kayalar noted that State Minister Ali Babacan and others had focused on Turkey's financial difficulties and needs in the event of an operation, but suggested that support for Turkey on the trade side would also be important. We responded that any discussion at this point would be highly speculative, but pointed to U.S.-Turkish cooperation on Afghan reconstruction as an indication of how our two governments could facilitate successful business partnerships in previously off-limits countries. ¶4. (C) Comment: Kayalar and his boss, State Minister Kursad Tuzmen, are strong advocates of Turkey developing stronger trade relations with its neighbors, including Iraq. We would expect this initial pitch by Kayalar to turn into a steady drumbeat as the GOT presses its case for preferential treatment. In fact, Turkey is well-placed on its own to take full economic advantage of the economic opportunities that would arise should Iraq return to the international community. DEUTSCH