SOMO ARREARS TO TURKEY REACH $668 MILLION

C O N F I D E N T I A L ANKARA 006095 SIPDIS E.O. 12958: DECL: 10/06/2015 TAGS: ETRD PREL TU IZ SUBJECT: SOMO ARREARS TO TURKEY REACH $668 MILLION REF: A. ANKARA 3842 ¶B. BAGHDAD 2845 ¶C. KIMMEL-BURGER EMAIL 10/6/05 Classified By: Acting DCM Thomas H. Goldberger for reasons 1.4 (b) and (d). ¶1. (C) MFA Coordinator for Iraq and Afghanistan Reconstruction Amb. Koray Targay called in A/DCM Oct. 6 to report that arrears owed to Turkish companies by the Iraqi State Oil Marketing Organization (SOMO) for humanitarian fuel for the Iraqi people had reached U.S.$ 688 million. In total, SOMO owes Turkish companies $820 million, but only $688 million are in arrears (45 days past product delivery). Targay requested that we bring this issue to the ITG's attention, as we have done in the past (refs a and b). He noted that while the GOT will continue to urge the Turkish petroleum companies to continue to ship product, some of these companies are medium-sized and will experience cash-flow and product quality problems soon. "We would appreciate it if Iraq could reduce the amount" of the arrears, Koray said. ¶2. (C) We understand (per ref c) that the ITG is aware of the situation. While Koray did not take a "hair on fire" approach to this issue, we are not sanguine that Turkish firms can keep the oil flowing indefinitely unless these arrears are addressed, at least in part. MCELDOWNEY