AMBASSADOR'S MEETING WITH AK PARTY LEADER ERDOGAN:

C O N F I D E N T I A L ANKARA 000476

SIPDIS


E.O. 12958: DECL: 01/17/2013
TAGS: PREL PGOV ECON EFIN TU
SUBJECT: AMBASSADOR'S MEETING WITH AK PARTY LEADER ERDOGAN:
CONCERNS ABOUT GOT ECONOMIC POLICY AND REFORMS

(U) Classified by Ambassador W.R. Pearson; reasons: 1.5 (b,d).



1. (C) Summary: Noting loss of market confidence, Ambassador
pressed AK party chairman Erdogan to use his influence
clearly to affirm that the GOT will hew to its IMF-supported
economic program. Erdogan professed that there are no
differences between the GOT and IMF on goals; he averred that
the social support measures the GOT must take are not in
conflict with GOT intentions to stay on the program. End
summary.



2. (C) Calling on Erdogan Jan. 19 to discuss several
subjects, Ambassador recalled how Erdogan had projected
dynamism and hope during the fall 2002 general election
campaign. Erdogan had also laid out his vision of Turkey as
a prosperous, democratic, Muslim model for President Bush at
the White House Dec. 10. However, initial enthusiastic
market reaction to Erdogan's approach has waned in the face
of uncertainty about the AK government's performance and
intentions. The U.S. now hopes Erdogan will take advantage
of his considerable credibility among the voters to deliver a
clearer and more concrete affirmation of AK's adherence to
its IMF-backed economic program.



3. (C) Ambassador suggested that the AK government could take
better advantage of two World Bank-financed social services
and agricultural support programs. One program would finance
subsidies for fuel bills and textbook expenses for poorer
strata. In the other case, the World Bank could help
expedite direct support payments to farmers which are now
being seriously delayed. Use of World Bank facilities would
avoid the negative impact on the primary surplus from any GOT
use of budgetary resources to fix these problems.



4. (C) Ambassador added that the USG is reviewing the whole
range of possible steps the U.S. could take to broaden trade
relations in a way useful to the AK government. Summing up,
Ambassador reiterated the role Erdogan could play to help
convince markets that the GOT remains committed to its
program.



5. (C) In response Erdogan asserted that there are no
problems between the GOT and IMF on basic principles and
goals. Indeed, growth was up significantly in 2002. But the
GOT cannot ignore the stark poverty among a significant
proportion of Turkish society and has to take steps to meet
social needs. In any event, the steps to reduce poverty are
not in contradiction with the IMF program, he averred.
PEARSON