AMBASSADOR, FINANCE MINISTER DISCUSS TERROR

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 003234

SIPDIS


STATE FOR E, EB/CBA, INL/C/CP, EB/ESC/TFS, S/CT AND EUR/SE
TREASURY FOR OASIA/ADKINS AND MILLS, AND OFAD DIRECTOR
NSC FOR GPETERS, MBRYZA, AND TMCKIBBEN


E.O. 12958: DECL: 06/09/2014
TAGS: EFIN PTER EINV ETRD TU
SUBJECT: AMBASSADOR, FINANCE MINISTER DISCUSS TERROR
FINANCE, IMF, INVESTMENT AND BOEING

REF: A. (A) ANKARA 1510

B. (B) ANKARA 1232


(U) Classified by Ambassador Eric Edelman. Reasons: 1.4(b,d)







1. (C) Summary: In a June 9 meeting to discuss USG
recommendations aimed at strenghthening Turkey's regime to
combat terrorist finance, Finance Minister Unakitan stressed
the importance that his government attaches to the issue, but
unfortunately turned for discussion of the details to MASAK
President Yarasli. Yarasli played down the problems
highlighted in the USG report and argued that most of its
recommendations were either being addressed or were not
relevant. Ambassador stressed the importance of Unakitan
staying personally involved, and won the Minister's
commitment to a follow-on meeting after July's Fincen visit.
Ambassador also stressed the need for further economic
reform, made a strong pitch for the GOT to resolve
outstanding problems affecting U.S. investors, and inquired
about future relations with the IMF and potential Boeing
aircraft sales. Unakitan said the GOT would continue to work
with the Fund and to resolve investment issues, but was
non-committal on Boeing. End Summary.



2. (C) Finance Minister Kemal Unakitan asked to see
Ambassador June 9 to discuss terrorist finance, in response
to the Ambassador's May 27 letter forwarding the executive
summary of the report of the U.S. Financial Systems
Assessment Team. That report had recommended several
measures to strengthen Turkey's regime to combat terrorist
financing, including improved legislation, efforts to
strengthen Turkey's Financial Crimes Investigative Unit
(MASAK),training of judges and prosecutors, and inclusion of
alternative remittance systems in Turkey's control regime.



3. (C) Unakitan said the GOT attached great importance to
combatting terrorist finance and to passage of new
legislation designed to strengthen MASAK. Unfortunately, he
then asked MASAK President Yarasli, whose weakness is a big
part of the problem on this issue, to respond to the
executive summary in more detail. Yarasli played down the
problems highlighted in the executive summary, and argued
that MASAK was fully capable of carrying out its
responsibilities. He said pending legislation would define
terrorism as a criminal offense, and otherwise would fully
comply with FATF recommendations. He denied that there were
"alternative remittance systems" in Turkey, said the
government already was undertaking needed training of judges
and prosecutors, and questioned the need for an "Intermittent
Legal Advisor" from the Justice Department.



4. (C) Ambassador reiterated the importance of Unakitan
making this issue a personal priority and of Turkey working
with the international community to strengthen its regime.
He proposed that, following this summer's visit by a Fincen
team, he and the Minister meet again to discuss progress to
date as well as ways to enhance bilateral cooperation.
Yarasli interjected that MASAK would stay in touch with the
Embassy, but Unakitan agreed to a follow-on meeting with the
Ambassador (much to Yarasli's chagrin).



5. (SBU) Turning to the broader economy, Ambassador
expressed disappointment over the GOT's inability to solve
any of the outstanding disputes and problems affecting U.S.
investors. He noted that, since their last discussion, a
U.S. company (Dillingham Construction) had decided to pull
out of Turkey because Turkish courts had refused to apply an
international arbitral award in its favor. Such judicial
decisions, the Ambassador continued, were a major deterrent
to U.S. investors. He again stressed how useful it would be
for Turkey if it could resolve at least 1-2 of the
outstanding investment problems ahead of the President's
visit. Unakitan took the point, and noted that the GOT had
just sent to Parliament a zoning law designed to address the
Cargill issue.



6. (SBU) Ambassador said it would also be good if the GOT
could clarify how it plans to move forward on privatization,
in the aftermath of failures on Tekel, Petkim and, most
recently, Tupras. Similarly, investors wanted to know what
Turkey's future relationship with the IMF would be. Markets
had rallied based in large part on prudent fiscal and
(independently-set) monetary policy, and would view the GOT's
decision vis-a-vis the IMF as an important indicator of its
intention to continue such policies.



7. (SBU) On privatization, Unakitan -- referring to the
Tupras issue - noted that the courts were independent, adding
that many judges were opposed to privatization and did not
understand markets. He noted that the Justice Ministry is
undertaking efforts to improve the effectiveness of the
judicial system, an effort that would be greatly enhanced by
the EU accession process. On the IMF, Unakitan said he would
meet with the Fund mission the following day, and would make
clear that the GOT was determined to continue to work with
the IMF. He noted that the Prime Minister had said the same
thing over the weekend. (Comment; Actually, the Prime
Minister has made conflicting remarks, and even Unakitan did
not clarify what he meant by "work with" the Fund. End
Comment)



8. (SBU) Ambassador concluded by asking about Boeing's
proposed sale of aircraft to Turkish Airlines. The Minister
said he had had a good meeting with Boeing in the U.S., and
looked forward to another meeting with the company in Turkey
shortly. He was, however, non-committal.




EDELMAN