Identifier
Created
Classification
Origin
05ANKARA5065
2005-08-29 15:27:00
CONFIDENTIAL
Embassy Ankara
Cable title:  

FUEL FLOWING AGAIN TO IRAQ

Tags:  ETRD ECIN PREL IZ TU 
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This record is a partial extract of the original cable. The full text of the original cable is not available.

291527Z Aug 05
C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 005065 

SIPDIS

E.O. 12958: DECL: 08/29/2010
TAGS: ETRD ECIN PREL IZ TU
SUBJECT: FUEL FLOWING AGAIN TO IRAQ

REF: ANKARA 4880

Classified By: Charge Nancy McEldowney. Reasons 1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 005065

SIPDIS

E.O. 12958: DECL: 08/29/2010
TAGS: ETRD ECIN PREL IZ TU
SUBJECT: FUEL FLOWING AGAIN TO IRAQ

REF: ANKARA 4880

Classified By: Charge Nancy McEldowney. Reasons 1.4 (b) and (d).


1. (C) Summary. Fuel shipments through Turkey to U.S.
military and SOMO depots appear to have resumed following the
partial clearing of SOMO payment arrears owed to Turkish
suppliers and the establishment of a new Turkish system for
monitoring deliveries in order to reduce smuggling. At the
same time, the Iraqis and Turks remain deadlocked on the
fundamental issue of where to locate a second border gate,
which is the only sustainable way to deal with the strains on
Habur. According to a Turkish MFA official, only U.S.
intervention can break this deadlock. End Summary.

--------------
SOMO Payments and Export/Transit Licenses
--------------


2. (C) In an August 29 meeting with Economic Counselor,
Foreign Ministry Deputy Director General for Economic Affairs
Mehmet Gucuk confirmed reports we have been receiving through
U.S. military email channels that Turkish companies have
resumed shipping fuel products to both U.S. military and SOMO
depots in Iraq following an interruption last week (week of
August 22). State Minister Kursat Tuzmen had also told
Charge August 25 that the issues delaying shipments had been
fixed. Gucuk said that the reason for the interruption was
both payments arrears owed by SOMO to Turkish suppliers and
the decision of Turkey's Foreign Trade Undersecretariat (FTU)
to "do something" about smuggling and illicit sale in Turkey
of fuel purchased by SOMO by making shippers verify
deliveries back to the Turkish Government.


3. (C) Gucuk confirmed that Turkish suppliers had received
large payments from SOMO during the past week. Since the end
of May, SOMO has paid approximately $933 million to the
companies, covering deliveries through June and part of July.
On August 26 in Ankara, Iraqi Oil Ministry Advisor and SOMO
Supervisor Samhi Faraj agreed with the FTU to regularize a
system for future payments whereby payments for an entire
month will be paid during the first 20 days of the following
month, with 50% of the amount due paid during the first week
of the following month. Gucuk stressed that this was an
informal agreement that would be tested when August payments

came due during the first week of September.


4. (C) Econ/C stressed the critical importance of both
sustainment and SOMO fuel shipments to shared U.S. and
Turkish interests in Iraq. Understanding the responsibility
of the FTU to regulate trade and combat smuggling, Econ/C
asked that the Embassy be informed in advance of any such
initiatives that had the potential to disrupt vital supplies.
Gucuk readily agreed, saying that following last week's FTU
actions (which had come as a surprise to MFA) the many
Turkish agencies regulating this trade had concluded an
agreement among themselves to keep each other informed.

--------------
Second Gate
--------------


5. (C) Gucuk said that the Turks and Iraqis remained
"deadlocked" on the second gate issue, with each side
insisting on its political priorities. A KDP interest in
retaining control of the border trade was, he said, the main
stumbling block to a reasonable solution. He argued that the
Iraqi proposal to put a second gate only 5 km away from Habur
made no practical sense as it would not be supported by an
expanded road network on both sides. Econ/C replied that the
U.S. had made a proposal to fund an impartial study that
would examine just such issues. Our idea was that this study
would provide an objective basis on which to make a decision.


6. (C) Gucuk said that, frankly, the Turks could not accept
the risk that a feasibility study would not result in a
conclusion favoring the Turkish option, or that the Iraqi/KDP
side would not block a conclusion favoring the Turkish
option. He suggested that "some kind of indication or
assurance from the United States that the Turkish proposal
would not be put aside" would give the GOT what it needed to
go forward with the TDA study.


7. (SBU) Representatives from Itochu, a Japanese firm that
has been contracted by the GOT to do a study on their
proposed border gate at Ovakoy (where the Turks would prefer
to build a second crossing),met with PolMilCouns on Aug. 22.
They estimate that it will cost $100M for two bridges and
other equipment at the crossing and asked for USG support to
encourage &both sides8 to support this option. PolMilCouns
responded that this is a bilateral issue between Iraq and
Turkey.

--------------
Comment
--------------


8. (C) Gucuk also argued that the increasing congestion at
Habur added to the risk of smuggling of fuel and other
perhaps dangerous products. As we described in reftel, Habur
will continue to be a bottleneck and problems will continue
to arise periodically as we, the Iraqis and the Turks attempt
to force more goods through a limited opening. Gucuk is
clearly correct that the Turks and Iraqis are blocked on the
second gate issue. Without taking sides, some type of USG
action that reassures the Turks that their concerns will be
respected seems needed to help break the deadlock.
MCELDOWNEY