SOUTHEAST TURKEY'S ECONOMY GETTING BY

UNCLAS SECTION 01 OF 03 ADANA 000177

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E.O. 12958: N/A
TAGS: PGOV ECON PREL PHUM TU SY IZ ADANA
SUBJECT: SOUTHEAST TURKEY'S ECONOMY GETTING BY

REF: ADANA 169


1. (SBU) Summary: The southeast's economy is not booming but it
is getting by. Fuel smuggling across Van's border with Iran has
taken on significant proportions. Van's business incubation
center provides an example of local business succeeding at doing
things on its own, without Ankara's help. Diyarbakir sees
itself as a European entrepot to the Middle East, modeled on
Singapore in East Asia. Diyarbakir businesses are seeking
expansion of trade with Iraq, and welcome investment from
outside the region, but feel that government incentives, though
appreciated, are not making a difference in the investment
climate. A good deal of money continues to flow across the Iraq
border, mostly through foreign exchange bureaus. Many of the
southeast's problems continue to be structural in nature. The
region requires assistance in dealing with a broad array of
women's advocacy issues. More young women are attending school
throughout the region, mostly supported by funding from a
UNICEF/GOT program. Villagers in the southeast continue to
return to their villages, but commitment to village return in
some areas remains weak. An NGO in Hakkari is running a small
de-mining project and seeks U.S. assistance. End summary.

Van: Fuel Smuggling and a Successful Business Center
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2. (SBU) The economy in the southeast is not booming, but it is
getting by. In Van province, where Iranian agricultural
products, processed foods and light consumer goods have been a
staple of area markets, fuel smuggling across the border with
Iran has taken on significant proportions. This activity
appears to be proceeding with de facto coordination between the
government and the local AK party. During a September 28 and 29
visit to Van and Hakkari we saw hundreds of trucks in the
process of moving fuel. Van police told RSO that 3,500 trucks
have been registered in the province recently; mostly cargo
trucks with factory-installed 650 liter tanks. In the small
town of Guzelsu, located about 13 miles from the border, we
witnessed large numbers of trucks off-loading fuel into other
vehicles, barrels, plastic containers and various receptacles.
Van's neighboring province, Hakkari, has suffered considerable
economic setbacks since the government shut down its official
border gate with Iran at Esendere. Still, AKP-governed Van
province keeps open an unofficial border crossing point at
Albayrak village, where most of the smuggled fuel appears to be
entering the province.


3. (U) On a more upbeat note, Van's World Bank-funded Business
Development Center provided an example of how local businesses
in the southeast are succeeding in doing things on their own.
The President of VANSIAD (Van's chapter of Southeast Turkey
Business Association) told us that 185 people had been employed
over that past four months at Van's Center. He commented that
Van's business community was trying to be dynamic enough to turn
the physical plant of the Center into a job creation opportunity
rather than letting the infrastructure of the failed former
parastatal Sumer textile factory go to waste. He reminded us
that Van and Tarsus were two such successful Business
Development Centers in the southeast, but that similar efforts
in Zonguldak and Adana were not working out.

Diyarbakir: Middle East Entrepot Seeks Investment
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4. (SBU) ConOffs met with GUNSIAD (Southeast Turkey Business
Association) officers in Diyarbakir, which held a trade fair
from September 30 through October 3 to attract business from
neighboring countries. With Turkey's growing ties to the EU,
Diyarbakir sees itself as a new European entrepot to the Middle
East, somewhat like Singapore or Hong Kong in East Asia. These
goals have the support of both central government and municipal
authorities in Diyarbakir. GUNSIAD officials told us that
business representatives from Syria, Jordan, Kuwait, Iran and
Iraq were in attendance at the fair. With the trade fair in
town, Diyarbakir provincial authorities cancelled a pro-EU rally
scheduled for October 2, mostly out of security concerns arising
from anti-EU sentiment in the country (reftel).


5. (SBU) Diyarbakir businesses are seeking an expansion of trade
with Iraq. Kaya Construction Company in Diyarbakir was awarded
a contract by TOBB for modernization of the Habur border gate
with Iraq. While GUNSIAD and CCI (Chamber of Commerce and
Industry) members in Diyarbakir are always looking for
opportunities to trade goods, they are trying to drum up
possible investment interest in Diyarbakir. GUNSIAD and CCI
officers told ConOffs that they welcome investment from outside
the region, but have seen no signs of interest from either
foreign or Turkish investors. Business contacts told us that
government incentives for investment in the region were
appreciated, but so far were not making any difference in the
investment climate. A Diyarbakir CCI official told us that
Diyarbakir-based business operations in Iraq had no problem
moving cash across the border. He added that a good deal of
money is flowing across the border through foreign exchange
bureaus. ConOffs have heard stories about cross-border cash
flowing through foreign exchange bureaus from businessmen in
Sanliurfa, Adana and Gaziantep. Stories of cash being brought
out of Iraq in suitcases also are common.

Continuing Structural Issues: Women's' Advocacy~
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6. (SBU) Many of the economic problems in the southeast continue
to be structural in nature, with occasional signs of
improvement. Diyarbakir's DEHAP mayor, Osman Baydemir,
requested American assistance in dealing with a broad array of
women's advocacy issues. These included educational campaigns
regarding women's rights and against domestic violence, building
and operating women's shelters and trying to decrease the number
of honor killings through efforts to change traditional Kurdish
social structures. Baydemir was pleased when we explained a
women's shelter program that the U.S. and UN are working on in
Van. He asked that a similar effort be started in Diyarbakir.
(Note: Mission Turkey already has proposed such a project to
EUCOM as a regional humanitarian effort. Its consideration is
pending. End Note.)


~Wasteful Wedding Ceremonies~
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7. (SBU) The Mayor offered a personal example of his recent
wedding as one possible case where non-traditional marriage
customs can succeed among tradition-bound Kurds. He and his new
bride recently held a small ceremony with no gifts (normally the
party would be a very elaborate affair wherein the couple would
receive gifts of gold) and invited only close friends and
family; as opposed to the traditional, large, expensive ceremony
that can often be burdensome on poor families. He half joked
that many Diyarbakir prospective grooms already were thanking
him for setting a new trend which would allow cash-strapped
young couples to invest in other needed goods rather than
elaborate wedding ceremonies. His advisors also considered the
move politically astute as they calculated that local tribal
leaders otherwise would have tried to use the vehicle of the
wedding gift to literally buy favor with Baydemir.

~Girls' Education~
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8. (SBU) Most of the Governors, sub-Governors and Mayors we
spoke with in Diyarbakir, Bitlis, Van, Ahlat, Hakkari and
Baskale said that more young women are attending school in their
districts, a development that is largely attributable to funding
from a UNICEF/GOT program to promote girls' education.. (Note:
The USG has contributed $9 million to a World Bank/Turkish
Social Solidarity Fund program that works through local
governors to provide cash payments to low-income families
(usually mothers) if they keep their children in school. The
fund also pays for boys, but pays more for girls who stay in
school. Another component is payments to poor families if they
get their infants vaccinated. End Note.) Municipal authorities
in Hakkari perceived that the government had shut off payments
from the UNICEF/GOT program, though this was not apparent in
other municipalities.

~Return to the Villages~
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9. (SBU) Local authorities also told us that between Van and
Hakkari villagers had returned to about 10 villages, but were
maintaining town residences. In practice, they only seem to be
going to the mountains for short, summer stays and only during
times of tension. On a contrasting note, showing the weakness
of commitment to village return, an NGO in Hakkari reported that
about 30 village youth had returned to the mountains (reftel).

~and De-Mining Efforts
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10. (SBU) AMCON Adana ConOff's further learned more about the
impact that mines and unexploded ordnance are having in Hakkari
and Van province, where tensions are high and clashes
continuing. The director of a small de-mining project, with
Dutch funding assistance and local Army/Jandarma cooperation,
detailed how she is trying to build mine awareness at the same
time that she weekly learns of those who have lost lives and
limbs from legacy mines or unexploded ordnance dating as far
back as the 1990's. She asked for U.S. help for de-mining
(noting a Jandarma unit was doing a small pilot feasibility
project near Yuksekova),building local capacity for explosive
ordnance disposal and providing prosthetics for victims. (Note:
AMCON Adana is trying to connect her small NGO with U.S. NGO
Physicians for Peace which does prosthetic work in Turkey. End
Note.)

REID