GOT OFFICIALS ON IRAQ SANCTIONS LIFT RESOLUTION,

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 003225 SIPDIS DEPT FOR EB/ESC, IO/UNP, EUR/SE, NEA/NGA EUCOM FOR J3, J5 AND POLAD E.O. 12958: DECL: 05/14/2013 TAGS: ETRD ETTC IZ PREL TU SUBJECT: GOT OFFICIALS ON IRAQ SANCTIONS LIFT RESOLUTION, TURKISH TRADE OUTSIDE OF OFF (SBU) REF: A. STATE 122029 ¶B. ANKARA 3055 ¶C. STATE 104141 ¶D. ANKARA 3190 ¶E. ANKARA 3058 ¶F. ANKARA 3156 (U) Classified by Acting Deputy Chief of Mission Stuart Brown for reasons 1.5 B, D. ¶1. (C) Summary: Senior MFA officials and the Energy Minister reacted positively to demarches by the Ambassador and others on the UN Security Council draft Iraq sanctions lift resolution. However, other MFA and Foreign Trade officials stressed the GOT's strong view that all pending, signed contracts under the Oil for Food Program, not just those approved and funded by the UN, should be implemented. They also reacted negatively to the proposal to cut the proportion of oil proceeds to be dedicated to compensation claims. Foreign Trade acknowledged that about USD 500 million in annual trade took place under a bilateral MOU with the former GOI, all outside OFF. The MFA's spokesperson on May 15 publicly called for lifting sanctions on Iraq. End Summary. ¶2. (C) Following up on ref E demarche, Ambassador asked Energy Minister Guler for Turkish support for the US-UK-Spanish Sanctions Lift Resolution at the UN Security Council (Ref D). Also, Acting DCM raised the issue with MFA Deputy U/S Kilic, and Dep PolmilCouns did the same with MFA's Americas department. Guler and MFA officials reacted positively, and promised to discuss the issue further within their government. The Ambassador also raised the resolution with MFA Undersecretary Ugur Ziyal May 13, emphasizing that if the Turks want to improve the bilateral relationship, they must take concrete actions to show support for our larger objectives (ref F). One such action would be a strong public statement supporting our efforts in New York, and actively lobbying other UNSC members to push for approval of the resolution. Ziyal took the message on board and said he would discuss with others. ¶3. (C) Other MFA and Foreign Trade officials were less forthcoming. Econoff met with Tevfik Mengu, Director General for Agreements at the Foreign Trade Undersecretariat, on May 13, and with Akif Ayhan, Head of Department in MFA,s Bilateral Economic Affairs Division, on May 14, to deliver ref A points. On the relationship of the UNSC resolution to the Oil for Food (OFF) Program and MFA,s recent nonpaper on this subject (ref B),Econoff maintained that the resolution would maintain the UN SYG,s authority to prioritize OFF contracts and would provide for implementation of previously-approved/ funded OFF contracts. ¶4. (C) Both Mengu and Ayhan maintained that all OFF contracts signed by the former Iraqi government, not just those approved/funded by the UN, should be implemented and that all should be given high priority. They presented Econoff with the following statistics on Turkey,s pending OFF contracts: -- Total: USD 1.9 billion; -- Approved by UN (not all are funded): USD 1.3 billion; -- Approved/funded by UN: USD 196 million (308 contracts); -- "Priority" contracts for food, medicine, hospital construction (not all are approved, funded): USD 660 million; -- Food contracts (not all approved, funded): USD 220 million. ¶5. (C) They also commented that the allocation of five percent of oil proceeds to the UN Compensation Commission was insufficient to address outstanding compensation claims. Both asked for further details as to how non-approved/funded OFF contracts would be handled under the resolution, and more broadly, how the Iraqi Assistance Fund would operate. ¶6. (U) In a public statement issued May 15, MFA called for removal of sanctions on Iraq, and for UN Security Council action to create a framework for international cooperation in Iraq. MFA noted the importance of protecting the rights of Turkish companies which had won contracts under OFF. PM Erdogan's foreign policy advisor told us May 15 that the PM would not be echoing the MFA statement. ¶7. (C) In an earlier meeting May 8 on Turkish-Iraqi trade pursuant to ref C , Mengu said that Turkey,s Memorandum of Understanding with the GOI governed bilateral trade worth USD 500 million annually over the last several years, all outside the OFF Program. This trade took the form of a barter of Iraqi oil for Turkish consumer and industrial goods. Turkey owes Iraq about USD 250 million in goods under this arrangement, and intends to negotiate payment in goods when the new Iraqi administration is ready to discuss this matter. On the issue of a second border crossing with Iraq, Mengu stated flatly that the Habur crossing, with a capacity of 1500 trucks daily in both directions, is not fully utilized. He opined that there is no need for a second crossing. PEARSON