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