UNCLAS SECTION 01 OF 02 ANKARA 000325

SIPDIS

SENSITIVE
SIPDIS

TREAS for OFAC (RWERNER), FINCEN (MMELANCON), EOTFFC
(POBRIEN) and (RLEBENSON, JSERAFINI), OIA (JGARDNER) and/or
(MLEAVITT)
JUSTICE FOR OPDAT

E.O. 12958: N/A
TAGS: EFIN KTFN PTER PBIO TU IZ
SUBJECT: TURKISH FINANCE MINISTER ON TERRORISM FINANCE


1. (SBU) Summary: In his first meeting with Finance Minister
Unakitan, the Ambassador stressed the importance of
preparing for Turkey's upcoming Financial Action Task Force
(FATF) review. Unakitan expressed confidence that the
legislation governing Turkey's anti-financial crime agency
will be passed soon, but seemed to be under the
misapprehension that passage of the law will be sufficient
for Turkey to implement the FATF recommendations. The
Minister expects both this law and the social security
reform laws needed for the IMF program to be passed in the
coming month. End Summary.

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Terrorism Finance
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2. (SBU) In response to remarks by the Ambassador about
improving U.S.-Turkish relations, Unakitan said that Turkey
and the U.S. have a strong friendship and both sides need to
see benefits from it. He believed the relationship will
continue to grow, noting bilateral cooperation in many
fields, including on anti-money laundering and counter-
terrorism finance (AML/CTF) issues. Unakitan said the GOT
views terrorism as a crime against all humanity and a global
issue.


3. (SBU) Ambassador raised Turkey's FATF review and the need
to pass the "MASAK law" as one of a number of needed
preparatory measures. Unakitan, as he has in earlier
meetings, implied that passage of the MASAK law will allow
Turkey to meet FATF requirements. The MASAK law (which
explicitly criminalizes terrorism finance and provides safe
harbor for bank filers of suspicious transaction reports) is
now under review by a parliamentary sub-commission,
according to Unakitan. The Minister was optimistic it will
be passed into law in the next month. (Later in the
conversation, however, he noted that the GOT has several
other priority draft laws in need of passage as well, such
as the law merging the social security institutions and the
pension reform law.)


4. (SBU) Ambassador mentioned the Turkish National Police's

creation of a terrorism finance unit and thought this was an
opportunity to intensify cooperation between MASAK (the
Turkish financial Intelligence unit under the Ministry of
Finance) and the police. The Minister said three ministries
cooperate closely on terrorism finance: Justice, Finance and
Interior (police).

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PKK
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5. (SBU) Ambassador pointed out another area of cooperation:
cutting off PKK support networks, including financing, in
western Europe and briefed the Minister on the December
visit of an interagency team of U.S. law enforcement and
intelligence experts with their Turkish counterparts. The
Minister seemed aware of the effort an appreciated it.

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Counterfeit Cigarette Factory in northern Iraq
-------------- -


6. (SBU) As he has before, Unakitan asked for U.S. help
regarding a factory in northern Iraq that produces
counterfeit cigarettes for export to Turkey, thereby causing
a substantial loss of tax (and tobacco parastatal) revenue.
Unakitan linked this issue to the PKK issue, suggesting the
factory was a source of financing to the PKK.

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IMF Program, Fiscal Policy and Social Security Reform
-------------- --------------


7. (SBU) Asked about the macroeconomic situation, Unakitan
echoed a point Economy Minister Babacan sometimes makes: the
AKP Government laid out its program in its pre-election
party manifesto in 2002 and has been implementing it since.
Unakitan said the GOT's core economic priorities are fiscal
discipline, lower inflation with the help of an independent
central bank, and privatization. He added that the 2005
start of EU accession negotiations had accelerated the

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improvement in the economic situation, and thanked the
Ambassador for U.S. support for Turkey's EU accession.


8. (SBU) On the twice-delayed social security reform
legislation, Unakitan said it was important for Turkey
regardless of the IMF program and that the social security
institutions' deficit was a big headache for him. He hoped
the legislation would be passed in the next month, as agreed
to with the IMF.

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Bio Note
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9. (SBU) When asked about his children's extended time in
the U.S., Unakitan said all three of his grown children had
studied and lived in the U.S. but had now returned to
Turkey. His oldest daughter, a medical doctor, had lived in
Pittsburgh, and his son and other daughter studied at Ohio
State. The youngest daughter earlier attended a girls'
school in Troy, NY. Unakitan said his two grandsons were
American citizens, having been born in the U.S.

Wilson