TURKISH TRUCKER STRIKE AGAINST SOMO IN STALEMATE

UNCLAS SECTION 01 OF 03 ADANA 000171

SIPDIS

SENSITIVE

EUCOM FOR J-4

E.O. 12958: N/A
TAGS: ETRD PREL ELAB ELTN IZ TU ADANA
SUBJECT: TURKISH TRUCKER STRIKE AGAINST SOMO IN STALEMATE

REF: BAGHDAD 2282


1.(SBU) This cable is not for internet distribution and contains
commercially sensitive information. Embassy Baghdad pass REO
Mosul.

2.(SBU) Summary: The Turkish transport union wildcat strike
against Iraqi SOMO, which started on Dec. 6, continues. This
strike is also affecting two of the three categories of fuel
that Turkish companies can ship to Iraq for MNF-I sustainment.
The most important sustainment fuel, JP-8, continues to flow,
but at lower rates than desired. Separate discussions with
Turkish supply companies and transport unions on December 23
indicate that this strike turns on desired wage increases by the
driver transport unions, who seem to indicate a wish that any
trucker carrying a load to Iraq receive the same wage per metric
ton delivered. Turkish petroleum supply companies say that
their infrequent contacts with SOMO indicate SOMO is unwilling
to raise its rates to them and only urges them to deliver their
contracted loads because of "shortages in Iraq and higher
seasonal consumption." These companies also report total SOMO
arrears to them in the range of $75-100 million for periods
ranging from the last 15 to 80 days, although they say that SOMO
payment practices have been improving almost across the board in
the last 30 days. Facing this perceived squeeze on what they
claim are their already slim profit margins, the Turkish
petroleum supply companies servicing SOMO intend to wait out the
strike by insisting that the drivers accept current wage scales,
hoping that drivers soon will feel the pinch of a lack of cash
flow. End Summary.

SOMO strike continues, now affecting sustainment, too
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2.(SBU) AMCON Adana and MJLC contacted several of the larger
Turkish petroleum supply companies contracted to SOMO and/or
DESC on December 23 to determine the status of their
deliberations on the ongoing trucker strike against SOMO. MJLC
reported that the strike is also affecting two of the three
categories of fuel (MOGAS and diesel) that Turkish companies can
ship to Iraq for MNF-I sustainment. Efforts to ship these two
categories of fuels in the last eight days have resulted in no
successful cross-border delivery, with 27 tankers currently in
limbo in southeast Turkey near the Habur border gate, allegedly
prevented from proceeding to the border crossing by drivers'
union threats against their families. An effort by MJLC to
secure Jandarma's involvement in this problem was frustrated by
the threatened drivers' unwillingness to make a statement to the
Jandarma and subsequent explanation to their aprent company that
they did not consider the Jandarma able to protect them or their
families from the alleged threats. However, the most important
sustainment fuel, JP-8, continues to flow, but at lower rates
than desired (average 45 versus 60 desired loads daily). The
largest Turkish oil supply company for sustainment, Petrol
Ofisi, is seeking to decouple sustainment fuels from the
pressures of the SOMO strike through a side deal and to test
that arrangement with a second 75-tanker delivery of MOGAS and
diesel starting on December 24, but declined to predict to AMCON
ADANA whether their gambit would bear fruit.

Strikers want 100% increase
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3.(SBU) The Turkish petroleum supply companies independently
commented that the drivers' unions with which they
intermittently are discussing the strike have demanded an almost
100 percent increase in wages per metric ton delivered. A
December 23 AMCON ADANA discussion with a local Turkish truckers
union representative confirmed that this is what driver supply
companies desire, even though some Trucker union association
group "elders" have recommended a lower starting bid and
readiness to negotiate to a lower point. The trucker union
representative said that the truckers recall that they were paid
higher rates last year for similar loads when contracted by the
U.S. for humanitarian deliveries through KBR and at least want a
return to those wage levels. They also claim that drivers
represent that their costs per delivery exceed the SOMO contract
wage rates. (Note: an important cost element here about which
they claim irritation is over a hundred dollars per load in
Peshmerga collected fees and additional alleged Peshmerga
solicitation of bribes in return for Peshmerga under-reporting
of load under-delivery at the northern Iraqi oil depots. End
Note.)

Turkish oil supply companies: SOMO not budging, so neither will
we
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4.(SBU) The Turkish petroleum supply companies say that their
contacts with SOMO have been limited recently, but even these
limited contacts (a few e-mails and phone calls, they say)
indicate SOMO is unwilling to raise its rates to them. In fact
the largest of the contractors, OPET, said it even received a
draft 2005 contract from SOMO recently insisting that wages
would be unchanged. Both large Turkish petroleum supply
companies that AMCON Adana contacted independently said that
SOMO has limited its replies to their strike reports to "urging
us to deliver their contracted loads because of shortages in
Iraq and higher seasonal consumption. They just tell us to do
the best we can and avoid any discussion of how we might rework
our contract with them to meet some of the strikers' demands."

5.(SBU) These companies also report SOMO arrears to them in
the range of $75-100 million for periods ranging from the last
15 to 80 days, although they say that SOMO payment practices
have been improving almost across the board in the last 30 days.
They say that in the last several months SOMO has shifted to
paying its contract through wire transfer, but that their levels
of accounts receivable are still "uncomfortably high" for some
of the larger suppliers and this risk, in part along with the
one-sided strike dialogue, is undermining their confidence in
developing a joint strike reaction position with SOMO.

We will wait the drivers out, oil suppliers say
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6.(SBU) Facing this perceived squeeze on what they claim are
their already slim profit margins, the Turkish oil supply
companies servicing SOMO intend to wait out the strike by
insisting that the drivers accept current wage scales, hoping
that drivers soon will feel the pinch of a lack of cash flow.
This determined stance is strengthened by their perception of
driver disorganization. They point out that the drivers' union
is fragmented among almost 50 local representatives, some of
whom bicker publicly in front of the petroleum supply company
representatives on the few occasions they have met. (Comment:
AMCON Adana and MJLC witnessed such driver disorganization in a
chance encounter in Iskenderun last week, at which different
local agha's acting as union representatives argued in front of
Petrol Ofisi representatives and us about whose drivers were
losing more and therefore in more relative distress caused by
SOMO's alleged low wages. End Comment.)

Why are there different driver wage scales?
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7.(SBU) Turkish supply companies indicate that wage
differentials for different Iraq contracts do exist, but for
what they consider sound market reasons. They say that MNF-I
sustainment loads receive the highest per load wages because the
U.S. government, through DESC, will payer higher rates than
SOMO. Additionally, the sustainment drivers face higher risks
of being attacked and can make fewer round trips per month
because of their more distant destinations in Iraq and security
constraints on their travel. In short, SOMO drivers on average
can make 3 round trips to Iraq monthly while their sustainment
counterparts can only make 1-2, depending on convoy availability
within Iraq and threat posture.

What do drivers and oil supply companies say will happen?
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8.(SBU) Drivers' union representatives, per discussions with
AMCON ADANA, MJLC, DESC or the oil supply companies, seem to
believe they have leverage over their Iraqi purchaser and
profess that they will wait until higher wages are offered.
They also claim that their individual drivers are leaving
vehicles either in northern Iraq, if awaiting return clearance
at the border, or in southeastern Turkey depots, and heading
home to southeastern Turkey villages for New Year's
celebrations. (Note: we would welcome any reporting on whether
this is occurring in northern Iraq and will seek confirmation in
southeast Turkey. End Note). On the other hand, Turkish oil
supply companies feel that the individual drivers soon will
exhaust any on-hand cash to which they have access and have to
return to work at no increase in wage levels. In the meantime,
dialogue between the oil supply companies and different layers
of drivers' representatives is reported as sporadic, fragmented
and inconclusive by both sides.

9.(SBU) Comment: This situation seems to be stuck in a
stalemate among Turkish parties. Absent a new catalyst in the
supply company-driver dynamic, near-term progress seems
unlikely. It also seems prudent to bear in mind that, should a
SOMO strike resolution materialize, there still will be a
delivery bottleneck at the Habur gate if it maintains its
current customs inspection process. Additionally, should SOMO
drivers receive higher wages, there is the possibility of a
synergistic negative effect on the sustainment Turkish driver
pool based on para. 7 observations. End Comment.

10.(SBU) Baghdad minimize considered.


REID