AK REVIVES PLANS TO SELL STATE LANDS,

UNCLAS SECTION 01 OF 02 ANKARA 002914

SIPDIS


SENSITIVE


STATE FOR E, EB/IFD/OMA, AND EUR/SE
TREAUSRY FOR OASIA - MILLS AND LEICHTER
STATE PASS USTR - NOVELLI AND BIRDSEY


E.O. 12958: N/A
TAGS: ECON EFIN EINV PGOV TU
SUBJECT: AK REVIVES PLANS TO SELL STATE LANDS,
IN SEARCH OF NEW REVENUE SOURCES

SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET
DISTRIBUTION.



1. (SBU) SUMMARY: PM ERDOGAN ANNOUNCED RECENTLY THAT
THE GOT IS PLANNING TO REALIZE BETWEEN $25-30 BILLION
IN NEW REVENUE FROM THE SALE OF STATE-OWNED "FOREST
LAND," MUCH OF IT TREELESS SUBURBAN SQUATTER
SETTLEMENTS. THE OPPOSITION CHP AND SEVERAL NGOS
CRITICIZED THE PROPOSAL, AND PRESIDENT SEZER HAS VETOED
THE CONSTITUTIONAL AMENDMENT THAT WOULD ALLOW THE SALE.
THE GOT PLANS TO PUT IT THROUGH PARLIAMENT A SECOND
TIME, AND IS ALSO PLANNING TO SELL OTHER, NON-FOREST
STATE LAND (WHICH WON'T REQUIRE A CONSTITUTIONAL
AMENDMENT.) MANY DEVELOPMENT ECONOMISTS PROMOTE
LEGALIZING SQUATTERS' OWNERSHIP OF STATE LAND AS A WAY
OF GETTING POOR PEOPLE ACCESS TO CAPITAL, AND THE
PROJECT WILL ALSO HELP TO REGULARIZE LAND OWNERSHIP.
HOWEVER, GOT CLAIMS THAT THESE SALES WILL SOLVE ITS
SHORT-TERM BUDGET FINANCING PROBLEMS ARE UNREALISTIC.
CYNICAL OBSERVORS, AND THE POLITICAL OPPOSITION, SEE IT
AS SIMPLY A WAY OF REWARDING REAL ESTATE DEVELOPER
CRONIES. END SUMMARY.



2. (SBU) PRIME MINISTER TAYYIP ERDOGAN AND FORESTRY
MINISTER OSMAN PEPE HAVE RECENTLY REVIVED LONG-STANDING
PLANS TO SELL TENS OF THOUSANDS OF ACRES OF STATE-OWNED
LAND CATEGORIZED AS "FOREST LAND" (MUCH OF IT
TREELESS). PM ERDOGAN HAS SAID THE PLAN IS TO SELL
SUBURBAN "FOREST LAND" TO CURRENT SQUATTER RESIDENTS,
AND THAT THE GOT EXPECTS $25 - 30 BILLION IN REVENUE
FROM SUCH SALES. MINISTER PEPE CLAIMED DURING A SPEECH
TO PARLIAMENT APRIL 1 THAT SUCH PRIVATE SECTOR
INVOLVEMENT IN THE MANAGEMENT OF "FOREST LAND" WOULD
HELP DEVELOP FORESTS. THE GOT PLANS TO SPEND 20% OF
THE REVENUE IT RECEIVES FROM THIS SALE ON IMPROVING THE
CONDITIONS IN SQUATTER COMMUNITIES.



3. (SBU) SUCH A PLAN WOULD HELP REGULARIZE TURKEY'S
INCOMPLETE LAND REGISTRY SYSTEM. HOWEVER, THE
OPPOSITION PARTY CHP AND SEVERAL NGOS CRITICIZED THIS
ATTEMPT TO SELL THE "FOREST" AREAS. MOST OF THE
CRITICISM FOCUSED ON THE DEFINITION OF "FOREST" AND THE
LACK OF CLARITY REGARDING THE POTENTIAL BUYERS OF THESE
LANDS. BEHIND THIS TECHNICAL CRITICISM LIES THE
SUSPICION THAT THIS AKP INITIATIVE IS INTENDED TO
PROVIDE PARTY SUPPORTERS, INCLUDING REAL ESTATE
DEVELOPERS, WITH CHEAP (NEARLY FREE) LAND. THE
OPPOSING PARTIES ALSO CLAIMED THAT THE GOT'S REVENUE
TARGET FROM THESE LANDS WAS EXAGGERATED, AND ANY
SIGNIFICANT REVENUE FROM SUCH SALES WOULD ONLY BE
REALIZED OVER A PERIOD OF YEARS.



4. (SBU) TURKEY'S CONSTITUTION POSES ANOTHER HURDLE TO
THIS PLAN. ARTICLE 169 STATES THAT "STATE FORESTS ARE
MANAGED AND EXPLOITED BY THE STATE IN ACCORDANCE WITH
THE LAW." THUS THE PROJECT TO SELL FOREST LAND
REQUIRES A CONSTITUTIONAL AMENDMENT TO ENABLE THE GOT
TO LEASE, SELL OR TRANSFER OWNERSHIP RIGHTS OF THESE
AREAS. THE GOT PUT THE CONSTITUTIONAL AMENDMENT TO A
PARLIAMENTARY VOTE ON APR 4, 2003, BUT NARROWLY FAILED
TO OBTAIN THE NECESSARY TWO THIRDS MAJORITY. THE GOT
PLANS A SECOND PARLIAMENTARY VOTE ON THE PROPOSAL SOON,
ACCORDING TO LOCAL PRESS.



5. (SBU) THE AK GOVERNMENT IS ALSO PLANNING TO SELL
OTHER STATE LAND THAT IS NOT CATEGORIZED AS "FOREST
AREAS." SUCH "NON-FOREST" STATE LAND COULD BE SOLD
WITHOUT AMENDING THE CONSTITUTION, AND A DRAFT COUNCIL
OF MINISTERS DECREE AUTHORIZING SUCH SALES IS CURRENTLY
CIRCULATING FOR SIGNATURE. REFERRING TO THIS DRAFT
CABINET DECREE, GOT SPOKESMAN CICEK RECENTLY ANNOUNCED
A "SQUATTERS PEACE," THROUGH WHICH THE GOT WILL SELL
NON-FOREST STATE LANDS TO THEIR EXISTING UNOFFICIAL
RESIDENTS.



6. (SBU) COMMENT: LEGALIZING SQUATTER FAMILIES'
OWNERSHIP OF STATE LAND IS GENERALLY A GOOD IDEA.
PERUVIAN ECONOMIST HERNANDO DE SOTO SEES THIS AS A STEP
TOWARDS GIVING POOR PEOPLE IN UNDERDEVELOPED COUNTRIES
ACCESS TO CAPITAL (SINCE THEY CAN BORROW AGAINST LAND
THEY LEGALLY OWN). BUT SUCCESSIVE TURKISH GOVERNMENTS
HAVE TREATED THE IDEA AS A MAGIC SOLUTION TO THE GOT'S
BUDGET FINANCING PROBLEMS (ANOTHER SUCH PHANTOM
SOLUTION IS PM ERDOGAN'S CALL FOR EACH CITIZEN TO
DONATE $100 TO THE GOT.) IT IS HARD TO IMAGINE
SQUATTERS PAYING BILLIONS OF DOLLARS TO THE STATE FOR
THIS LAND. CYNICS HERE BELIEVE THE PROJECT IS MOSTLY
ABOUT GIVING SWEET DEALS TO REAL ESTATE DEVELOPER
CRONIES, AND ONLY COLLATERALLY HELPING AK CONSTITUENTS
IN THE SUBURBAN SQUATTER SETTLEMENTS.
PEARSON