Identifier
Created
Classification
Origin
05ANKARA4880
2005-08-19 13:40:00
CONFIDENTIAL
Embassy Ankara
Cable title:  

TURKEY WORKING TO EXPEDITE FUEL EXPORT TO IRAQ,

Tags:  ECIN EPET ETRD PREL IZ TU 
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191340Z Aug 05
C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 004880 

SIPDIS

E.O. 12958: DECL: 08/05/2010
TAGS: ECIN EPET ETRD PREL IZ TU
SUBJECT: TURKEY WORKING TO EXPEDITE FUEL EXPORT TO IRAQ,
BUT HARBUR GATE REMAINS BOTTLENECK

REF: A. ANKARA 4609


B. ANKARA 4367

Classified By: Economic Counselor Thomas Goldberger for reasons 1.4 (b)
and (d)

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 004880

SIPDIS

E.O. 12958: DECL: 08/05/2010
TAGS: ECIN EPET ETRD PREL IZ TU
SUBJECT: TURKEY WORKING TO EXPEDITE FUEL EXPORT TO IRAQ,
BUT HARBUR GATE REMAINS BOTTLENECK

REF: A. ANKARA 4609


B. ANKARA 4367

Classified By: Economic Counselor Thomas Goldberger for reasons 1.4 (b)
and (d)


1. (C) Summary: The GOT seems to be doing its best to
maximize truck traffic at Habur Gate, but shipping flow
through the gate will remain an on-going problem for a
variety of reasons, particularly because the single gate will
remain a bottleneck and because civilian and military needs
in Iraq appear set to continue to grow. Late payments to
Turkish petroleum product shippers from SOMO will also
continue to be a problem that could threaten to interrupt
civilian supplies. While there will be a modest expansion of
capacity at Habur in a year or so, the only long-term
solution is construction of a second border crossing, which
remains stymied by Turkish and Iraqi inability to agree on a
location and supporting road network. End Summary.

Urging Turkish Customs to Maximize Throughput at Habur:
-------------- --------------


2. (C) Following Ref A's reports of severe tightness in fuel
supplies in Iraq, post continued to engage the GOT to urge
that every possible measure be taken to maximize throughput
of fuel supplies at the congested Habur Gate. Charge relayed
this message by phone and diplomatic note to MFA Deputy Under
Secretary Ender Arat. MFA subsequently informed Embassy that

SIPDIS
it had "issued instructions to alleviate the situation" and
there did appear to be an improvement on the ground. Customs
Director General Sezai Ucarmak and Habur Gate Director Rostem
assured Econ Counselor on August 8 that the GOT was doing its
best to facilitate truck processing. They provided figures
that showed an increase in processing, and - in any event -
asserted that they were surpassing their perceived informal
quota of 1000 daily tankers southbound (as well as
prioritizing tankers over freight). They admitted that there
had been some changes in personnel, but asserted that the
gate was open 24/7 for truck processing. The customs
officials noted that fewer trucks chose to use night-time

hours (during a recent trip to Habur, ODC logistics officer
learned that semi-official processing facilitators did not
work at night, so truckers would have to "get all the boxes
checked" on their own). They asserted that the gate was
therefore operating at maximum physical capacity, and
additional staffing would not alleviate the situation. The
customs officials complained that the Iraqis batched convoys
of trucks, and would sometimes not accept trucks from the
Turkish side (this has not been confirmed by other sources).
Contrary to previous reporting (Ref B),the gate director
said that the waiting line was about 7 km (vice what he said
was erroneous reports of 70 km; the relatively short line was
corroborated by ODC Officer on the ground.)


3. (SBU) In an August 10 meeting with Econ Counselor,
Customs Under Secretary Cihat Ancin corroborated these
assertions. He said that with increased security and
cooperation on the Iraqi side, two-way processing could
increase from current 5,300 to 6,000 trucks. Both
interlocutors stressed near term projects to expand
processing capacity at the gate.

Measures to Ease Habur Gate Congestion:
--------------


4. (SBU) Aside from building a second crossing (Per Ref A,
still stymied by disagreements about location),two other
initiatives are in the works to expand existing capacity;
however, neither will be completed quickly and neither is
likely to fully solve the bottle neck. The Union of Turkish
Chambers of Commerce (TOBB) has a contract on a
Build-Operate-Transfer basis from the Turkish State to
rehabilitate and expand the Habur Gate. According to Under
Secretary Ancin, the processing capacity would increase by

SIPDIS
30%. He expects construction to take 15 months, but gate
capacity could be reduced by as much as 50% during this
period, although Turkish officials are making strenuous
efforts to avoid and minimize disruptions. Ancin said, for
example, that the Sirnak Governor's Office will set apart
additional areas to relieve accumulation at the gate (ODC
Officer saw this area.) Note: We have received assurances
that the construction would be phased to minimize disruption,
but assume that in reality there will be some periodic
reduction of flow. End Note.

5. (SBU) Another initiative is to create a pipeline across
the border. State-owned Turkish Petroleum International Co.
(TPIC) Vice President Sadi Gungor described its project to
Energy Officer on August 11. He said that TPIC has completed
the Turkish portion of the 15 km pipeline, but is waiting for
SOMO to arrange Iraqi approval and to coordinate setting up
receiving and measuring mechanisms. TPIC aimed to pump up to
1500 tons per day, the equivalent of 100 tankers. The TPIC
rep stressed their willingness to help improve the situation
in Iraq, including partnering with and representing U.S.
firms. He expressed extreme frustration with the challenges
of working with the Iraqi side. Gungor described TPIC's
efforts to establish a rail connection for shipping fuel via
Syria (again for 1500 tons per day or 100 tanker equivalent);
he said that unfortunately this scheme had been dropped
because of unreasonable demands from Syria and security
problems.


SOMO Late Payments a Threat to the System:
--------------


6. (SBU) The TPIC rep said that as of the week of August 15,
TPIC had stopped shipping gasoline to SOMO, because SOMO
non-payment and/or arrears had breached $1 billion (of which
TPIC held $200 million as the major shipper from Turkey). He
said that this amount was beyond any reasonable limit;
moreover, he asserted that it was a conscious financing
mechanism on the part of the ITG. This number exceeded the
then estimate from MFA of $600 million overdue (with another
$300 million reportedly on the verge of becoming arrears).


7. (C) MFA officials subsequently told Econ Counselor that
SOMO then paid $230 million on August 17, bringing total due
from SOMO to Turkish companies to $600 million, of which $520
million was in arrears. SOMO promised another payment of
$150 million by August 19. MFA pointed out that SOMO had
doubled its orders from Turkish companies as of July 1,
increasing Turkish companies involved to 30 from 16, as an
explanation for the growth in arrears.


8. (C) Comment: Although Post believes that the Turks have
made sincere short term efforts to facilitate fuel shipments
to Iraq, Habur Gate will remain a troublesome bottleneck,
creating episodic problems requiring intervention by U.S.
military logistics officers in the areas, as well as by the
Embassy. GOT Customs appears to be effectively balancing the
demands of tankers and freighters, in the face of hot
temperatures and tempers and periodic lines. GOT has put in
place a number of initiatives to increase processing
capacity, but the vexing problem of scarce resource capacity
will endure as long as there is just one gate. TPIC's claim
that it has stopped shipping fuel to SOMO (without any effect
on sustainment shipping) is difficult to measure on the
ground, but corroborates our fears that the pervasive issue
of SOMO non-payment is not sustainable. Large private
companies had already exited the business and state company
TPIC appears to have reached its limit on exposure to SOMO in
the face of no collateral or guarantees. End Comment.
MCELDOWNEY