SCENESETTER: AMBASSADOR SCHNABEL'S VISIT TO TURKEY

UNCLAS SECTION 01 OF 05 ANKARA 006207 SIPDIS DEPARTMENT FOR EUR/SE E.O. 12958: N/A TAGS: PGOV PREL EU TU SUBJECT: SCENESETTER: AMBASSADOR SCHNABEL'S VISIT TO TURKEY REF: A. ANKARA 5781 ¶B. ANKARA 6116 ¶1. (SBU) Summary: Your visit to Turkey provides an excellent opportunity to assure the Turks that the U.S. continues to support Turkey's EU candidacy. Some elements in Turkey view the U.S. and EU as rival power blocs, and question why the U.S. would want Turkey in the EU. By highlighting areas of U.S.-EU cooperation, you can help disabuse the Turks of the view that their EU membership would result in a lesser relationship with the U.S. The GOT has adopted a wide range of EU-related legal reforms over the past three years, designed to crack down on torture, ensure gender equality, and expand the rights of expression, association, and religion. The GOT has also created a high-level Reform Monitoring Group to overcome bureaucratic resistance to the reforms. GOT officials believe the European Commission's October 6 reports pave the way for the opening of accession talks in 2005, though they are concerned that some Commission recommendations would subject Turkey to different standards than those applied to other candidate countries. Some pundits and opposition party leaders have criticized the Commission reports. Our approach is to continue to encourage the Turks to look on the positive side and to take yes for an answer. ¶2. (SBU) On Cyprus, we are taking steps to ameliorate the isolation of the Turkish Cypriots, without recognizing the so-called "TRNC." The highest priorities for Turkish Cypriots and the GOT are direct trade and direct flights between the U.S. and north Cyprus. Our EU contacts say ROC President Papadopolous has not gained support for his call for Turkish concessions on Cyprus in exchange for the opening of accession talks. Some GOT officials share our concern over Iran's nuclear program; Turkey has urged Iran to cooperate with the IAEA and EU-3. Turkish-Armenian relations remain deadlocked; Turkey will not open the border with Armenia or restore diplomatic relations absent Armenian concessions on Nagorno-Karabakh and other occupied Azeri territory. The GOT shares our broad goals on Iraq and is supporting our efforts. Bilateral trade with Iraq is growing rapidly and is expected to reach $1.8 billion this year. At the same time, the GOT is concerned about Kurdish IDP flows into Kirkuk and the continued presence of the PKK in northern Iraq. ¶3. (SBU) The Turkish economy has recovered strongly from the financial crisis of 2000-2001 and is growing at an annual pace of over 10 percent. However, the recovery remains vulnerable due to a large current account deficit and a large debt. Due to historic economic/political volatility and opaque regulatory/judicial systems, Turkey has long received less foreign direct investment than other countries of similar size and potential. GOT officials underestimate the enormous challenges they will face in adopting the economic requirements of the EU acquis. End Summary. -------------- Need to Assure Turks of U.S. Support -------------- ¶2. (SBU) The USG has consistently encouraged the GOT's EU-related reform process and urged the EU to recognize Turkey's progress, consistent with our overall policy of supporting Turkey's EU candidacy. Nevertheless, some elements in Turkey, including many members of Parliament, are skeptical of U.S. support. They tend to overlook the close bonds between the U.S. and Europe and view the U.S. and EU as rival power blocs. In that context, they find it difficult to understand why the U.S. would support Turkey's EU candidacy. At the same time, some Turks who value the Turkey-U.S. relationship worry that EU membership will undermine relations with Washington. Your visit provides an excellent opportunity to place the U.S.-EU relationship in proper perspective. You can outline for Turkish interlocutors the many areas of U.S.-EU cooperation, and explain how Turkish membership would benefit all parties. We want to assure the Turks that we continue to support them, without making it appear to Europeans that we are meddling. -------------- GOT Has Made Major Reforms -------------- ¶3. (SBU) The European Commission's October 6 recommendation to open accession talks with Turkey capped an intense period of GOT legal reform. Since 2001, the GOT has adopted two major constitutional reforms and eight wide-ranging legislative packages. Many of the most significant reforms were adopted under the current AK Party (AKP) government, which came to power in November 2002. The reforms include legal changes designed to crack down on torture, ensure gender equality, and expand the rights of expression, association, and religion. Under the reforms, the State-owned TRT media company has begun news broadcasts in Kurdish and other minority languages, albeit under tight restrictions, and Kurdish language courses have been opened in several cities. Parliament in September adopted a new Penal Code that includes longer prison terms for those convicted of torture and "honor killings" (the killing by immediate family members of women suspected of being unchaste). The GOT is planning to adopt additional reform measures before the December EU Summit, including new, less restrictive laws governing associations and foundations. The EU, USG, and other outside observers have noted that implementation of the reforms has lagged in many cases, in part due to obstructionism by elements of the bureaucracy opposed to reform. The GOT has established a high-level Reform Monitoring Group, chaired by FM Gul, to identify and try to overcome such obstacles. -------------- GOT Leaders Positive About EU... -------------- ¶4. (U) GOT officials believe the Commission's October 6 reports pave the way for the opening of accession talks in 2005 (reftel A). Embassy contacts say they accept many of the caveats contained in the reports. For example, they note that language recommending that accession talks be suspended in case of a "serious and persistent breach" of democratic principles mirrors language used for Croatia. They also accept the EU's stated intention to monitor how the GOT implements reform legislation over time, noting that GOT leaders have pledged to follow through on the new laws. PM Erdogan, FM Gul, and other top leaders have focused their public statements on the positive elements of the reports, noting that the Commission recognized Turkey's progress on human rights reform and recommended that the EU open accession talks. -------------- ...But Raise Some Concerns -------------- ¶5. (U) At the same time, however, the GOT is concerned about several elements of the Commission reports, including: -- The Commission states that accession talks will be "an open-ended process whose outcome cannot be guaranteed beforehand;" -- The Commission proposes the establishment of a screening process that would precede the opening and closure of each chapter of the accession talks; and -- The Commission indicates that the EU might place permanent restrictions on the free movement of Turkish workers. ¶6. (SBU) The Turks argue that the EU would be subjecting Turkey to different standards than those applied to other candidates if it were to implement these elements of the report. GOT officials are lobbying behind the scenes to ensure that EU leaders do not include similar language in the EU Council report in December. Representatives from some EU states have told the Turks the caveats in the reports are unimportant and will not undermine Turkey's EU candidacy. ¶7. (SBU) Contacts from EU embassies tell us the GOT should be careful not to pursue their concerns too aggressively. The October 6 reports represent the best possible outcome for Turkey, given that some Commissioners oppose Turkey's candidacy, as do many EU citizens. They warn that by complaining too loudly the Turks only undermine their backers in the EU, many of whom are working against public opinion in their countries to support Turkey's candidacy. The GOT needs to recognize that Turkey's candidacy is controversial in Europe. The GOT may feel pressure to address elements of the Commission reports that are unpopular in Turkey, but EU membership is overwhelmingly popular among Turks. The GOT should be able to manage any public anxiety about some of the language in the reports. You can help influence the GOT's approach to the EU by encouraging your Turkish interlocutors to focus on the most important element of the Commission reports -- the recommendation that the EU begin accession talks with Turkey. You can also explain the challenges faced by Turkey's supporters in the EU. -------------- Some Press, Opposition Voices Criticize EU -------------- ¶8. (U) Some in Turkey are circumspect about the Commission reports, or even hostile. President Sezer called on the EU Council in December to remove "negative elements" of the reports, and emphasized the need to protect national interests during accession negotiations. Onur Oymen, an MP from the opposition Republican People's Party (CHP, the only party other than the ruling AKP to hold a significant number of seats in Parliament) told us the Commission reports are "below our expectations." Devlet Bahceli, chairman of the Nationalist Movement Party (MHP),declared during a press conference that the EU is trying to "justify terrorism" and "insult the Turkish State." Various pundits in both the nationalist and Islamist press also criticized the Commission. ¶9. (U) In particular, a range of political leaders and commentators slammed the Commission for referring to Kurds and Alevis as "minorities." In Turkey, the term "minority" has a legal meaning tied to the 1923 Lausanne Treaty. The Turkish State interprets the Treaty as conferring minority status exclusively to three non-Muslim religious groups: Greek Orthodox Christians, Armenian Orthodox Christians, and Jews. EU and GOT officials are currently discussing the issue; Ambassador Kretschmer, head of the EU Representation to Turkey, has said publicly that the official GOT definition of "minority" may violate a number of international conventions signed by Turkey (reftel B). -------------- Cyprus -------------- ¶10. (SBU) On Cyprus, we are taking modest but consistent steps to help ameliorate the isolation of the Turkish Cypriots and prepare them for eventual reunification of the island, while not recognizing the so-called "TRNC": expanded contacts with "TRNC officials;" extended validity U.S. visas for Turkish Cypriots; expanded opportunities for USG officials to travel to north Cyprus; $30.5 million to help Turkish Cypriot economic development; and increased scholarships for Turkish Cypriot students. The highest priorities for Turkish Cypriots and the Turkish government are direct trade and direct flights between the U.S. and the north. We have taken steps forward on both. Our Agricultural Attache accompanied a USG-sponsored Turkish Cypriot delegation to a Paris trade show in October, and earlier this month he visited North Cyprus to conduct a business seminar. A TSA team conducted an informal security survey of North Cyprus' Ercan Airport in October. ROC President Papadopolous is threatening to veto Turkey's being given a date to begin EU accession negotiations unless Turkey makes concessions on Cyprus before the December 17 EU Summit. However, the EU's perceived failure to move forward effectively on direct trade and aid for the Turkish Cypriots has made concessions practically impossible for Ankara. According to EU colleagues here, Papadopolous' demands have not yet gained support. -------------- Iran -------------- ¶11. (SBU) PM Erdogan visited Tehran in late July, but Iranian hardliners scuttled a reciprocal visit to Turkey by President Khatami in September. Turkey has urged Iran to cooperate with the IAEA and EU-3. Some -- but not all -- Turkish officials share our concern and sense of urgency on Iran's nuclear program. Gas is a major topic between both countries, but for different reasons: Turkey wants to re-negotiate a more favorable price to its 1996 gas deal with Iran; Iran wants Turkey to agree to export gas to the EU. -------------- Caucasus -------------- ¶12. (SBU) Attempts to unblock Turkish-Armenian relations are at a standstill; Turkey will not open the border with Armenia or restore diplomatic relations absent Armenian concessions on Nagorno-Karabakh and other occupied Azeri territory. Meanwhile, Turkish-Azeri relations, based on ethnic and religious ties, remain strong. Turkey has recently played a constructive role in Georgia, supporting Georgian independence and territorial integrity during the Ajara crisis and urging restraint by all sides in South Ossetia. Turkey seeks to expand bilateral trade, and is providing equipment and training to the Georgian military in coordination with us through the OSD/EUCOM-led Caucasus Working Group. -------------- Iraq -------------- ¶13. (SBU) The GOT shares our goal of a unified, prosperous, secure Iraq at peace with its neighbors and contributes to that objective while harboring concerns about developments there. Turkey allows us to ship sustainment supplies and humanitarian fuel through Turkey to Iraq and perform some related operations through Incirlik Air Base. Ankara offered troops last fall, but due to Iraqi sensitivities we and the Turks decided it better that they not go. Bilateral trade, expected to reach $1.8 billion in 2004, is growing rapidly. Despite serious security challenges -- anywhere from 30-60 Turks have been killed by insurgents, with more casualties as the insurgency intensifies -- the GOT has kept the border open (on average 1500 Turkish trucks cross into Iraq every day). There are also about 1,000 Turkish contractors in Iraq working in support of the coalition. Turkey has pushed both the Iraqis and us to enhance security measures for Turkish truck drivers; both of us have done so, but attacks regrettably continue. The GOT is especially concerned about: Kirkuk, where uncontrolled Kurdish IDP flows threaten to ignite ethnic tensions and, they fear, undermine Iraq's territorial integrity; and the continued presence in northern Iraq of the terrorist PKK/Kongra Gel, which has stepped up its attacks in Turkey in recent months. -------------- Economy -------------- ¶14. (SBU) With the support of the international community, Turkey has recovered strongly from the financial crisis of 2000-2001. After falling by 9.4 percent in 2001, real GDP increased 7.8 percent in 2002 and 5.9 percent in 2003. So far this year, the economy is growing at an annual pace of over 10 percent. Consumer price inflation, which peaked at 69 percent in 2001, has declined to under 12 percent per year -- a 30-year low -- and interest rates have fallen from 77 percent to 22 percent and the lira is trading in a stable range. However, Turkey's financial recovery remains vulnerable due to a large current account deficit, which could reach 5 percent of GDP this year, and a large debt with a short-term maturity structure. At the same time, unemployment and poverty rates remain high, and ordinary people have not felt much benefit from the overall macroeconomic improvement. Macroeconomic success has also bred a sense of complacency about the need to persist with the pervasive structural reforms required for Turkey to attract the large amount of domestic and foreign investment it needs to sustain high growth and improving living standards. In addition to greater progress on delayed privatization plans, reforms of the banking system, social security system, tax system and business environment are necessary. These issues are being addressed in the current negotiations of a new 3-year IMF stand-by program. ¶15. (SBU) Due to its historical economic and political volatility and its opaque regulatory, legal, and judicial environment, Turkey has long received far less than the amount of foreign direct investment received by other countries of similar size and potential. As was the case for other "convergence countries," some GOT leaders expect a flood of foreign investment if Turkey gets a date for EU accession negotiations. However, this is unlikely to materialize until Turkey gets more serious about privatization and business climate reforms. The process of adopting the European Community's acquis will reinforce macroeconomic progress, but most of all help institute widespread microeconomic reforms to attract investment, boost productivity and sustain rapid growth needed to reduce underdevelopment in large portions of the economy. However, there is a widespread misunderstanding of the enormous challenges that Turkey will face in the accession process. As a result, Turkey is poorly prepared to shoulder the administrative burdens of the accession negotiations, adopting and implementing the acquis, and managing the transfer of funds and implementation of programs under EU pre-accession funds. The Turks also underestimate how thoroughly the adoption of the acquis will affect every aspect of how the economy functions and nearly every other aspect of their lives. In addition, Turkish officials do not acknowledge how costly Turkey's membership could prove. For example, bringing Turkey's environmental infrastructure up to EU standards will cost more than 60 billion Euros. In a country where nearly a third of the labor force works on farms, agricultural reform will be particularly challenging, as will overcoming persistent poverty and regional income disparities in a country whose per capita income is 27 percent of the EU-15 average, and where living standards in large regions of the country are closer to those in the Third World than the EU. EDELMAN