FOREIGN TRADE U/S ON IRAQ/IRAN

C O N F I D E N T I A L ANKARA 006334

SIPDIS


STATE FOR E, P, EB, NEA/NGA AND EUR/SE
TREASURY FOR OASIA - MILLS AND LEICHTER
STATE PASS USTR FOR LERRION
NSC FOR BRYZA/MCKIBBEN


E.O. 12958: DECL: 10/08/2013
TAGS: ETRD ETTC PREL TU IZ IR
SUBJECT: FOREIGN TRADE U/S ON IRAQ/IRAN


REF: ANKARA 5658


(U) Classified by DCM Robert Deutsch. Reason: 1.5(b,d)



1. (C) Foreign Trade U/S Tuncer Kayalar told us October 6
that, during his recent visit to Teheran, State Minister
Kursad Tuzmen had warned Iranian President Khatami not to
"play games" on nuclear issues and to avoid supporting
terrorists. Khatami responded, per Kayalar, that Iran would
meet its commitments to the IAEA. Kayalar suggested that
Turkey -- particularly Minister Tuzmen -- could play a
helpful role in U.S. and international efforts to push
Teheran to behave better on nuclear and other issues.



2. (C) Kayalar said press reports indicating that Turkish
companies accompanying Tuzmen had signed $200 million worth
of export contracts probably understated matters. Of the 350
companies at the Teheran industrial fair, Turkish companies
made up nearly one-third. Also, Tuzmen and his Iranian
counterparts had agreed to establish border trading posts,
which Kayalar described as similar to "duty-free" shops
located right at the border crossing. Kayalar acknowledged
that these posts would generate only a small amount of trade,
but thought it would boost the local economy. He said Turkey
hoped to double bilateral trade with Iran, which now stands
at some $2.2 billion annually.



3. (C) The U/S said Turkish exports to Iraq were booming,
and could reach $1 billion by year-end. This was having a
very positive impact on the economy in Turkey's poor
southeast, and the GOT is anxious to keep it going. Kayalar
said the government had done everything possible to enhance
efficiency at the Turkish side of Habur Gate, but believes a
second gate -- along with a direct rail line -- is essential.
(Comment: In a demonstration of the lack of interagency
communication in Ankara, Kayalar said he was unaware that
Habur Gate would undergo renovation and that the MFA had
asked CPA to agree to a temporary "second" gate while the
renovation was underway. End Comment) Echoing Kayalar's
comments, Southeastern Exporters' Union Chairman Abdulkadir
Cikmaz told the press that exports to Iraq were revitalizing
the southeast's economy, and that several production plants
in Gaziantep had recently re-opened to service Iraqi import
demands.



4. (SBU) We reminded Kayalar of our recent demarche (reftel)
on U.S. ExIm's framework agrement with the Trade Bank of
Iraq, and suggested that a similar, if smaller-scale,
agreement by Turkey's Export-Import Bank would benefit both
Turkish exporters and the Iraqi economy. Kayalar, who is
Chairman of the Turkish Export-Import Bank board, said the
GOT is studying the issue, but his response did not suggest
any urgency.




EDELMAN