FREEZING IRAQI ASSETS: INITIAL TURKISH RESPONSE

C O N F I D E N T I A L ANKARA 002661

SIPDIS


SENSITIVE


STATE FOR EB/ESC, EUR/SE, NEA/RA, AND TREASURY
(BFOX/JZARATE/WMURDEN)


E.O. 12958: DECL: 4/24/2006
TAGS: ECON ETTC EFIN TU IZ
SUBJECT: FREEZING IRAQI ASSETS: INITIAL TURKISH RESPONSE


REF: STATE 101736



1. SUMMARY: (C) On April 24, we delivered reftel demarche to
Central Bank Governor Sureyya Serdengecti and Banking
Regulation and Supervision Agency (BRSA) Acting Chairman
Ibrahim Canakci. Both officials said they would make this a
top priority and welcomed any information or assistance.
Serdengecti welcomed the USG delegation of experts as well.
END SUMMARY.



2. (C) Serdengecti told us he would make investigation of
Iraqi assets a top priority. The Central Bank monitors
electronic bank transfers and gets other information on bank
transfers. He also welcomed a U.S. delegation visit.
"Exchanging information is always beneficial. We learn from
them, they learn from us. It's a great idea," Serdengecti
said. Serdengecti explained that, while the Central Bank can
search for records of Iraqi assets, freezing those assets in
Turkey would be the responsibility of the Ministry of Finance
(visit is planned for April 25 - septel).



3. (C) Serdengecti said he suspected there were still
existing Turkish-Iraqi private sector links, recalling
requests by Turks to exchange huge amounts of Kuwaiti dinars
after the Iraqi invasion of Kuwait in 1990. But Serdengecti
also noted the Saddam regime may have been reluctant to
deposit money in Turkey, given the claims of Turkish
exporters to Iraq, which date back to before the first Gulf
War. They amount to $1.2 billion in non-payments, beginning
during the 1980's, when GOI and Iraqi businesses did not pay
Turkish exporters during the Iran-Iraq War. Under an
agreement between the GOT and the Saddam Hussein regime, the
GOI was supposed to reimburse the Treasury, which in turn was
reimbursing the exporters. Serdengecti said that all
payments from the GOI ended just prior to the first Gulf War
(Treasury was the loser, as it reimbursed exporters the full
amount.)



4. (C) Earlier April 24, BRSA Acting Chairman Ibrahim
Canakci told us the BRSA's sworn bank auditors would be
alerted to this request. He also welcomed any information or
assistance the U.S. could offer.
PEARSON