Identifier
Created
Classification
Origin
06ANKARA6366
2006-11-07 16:11:00
CONFIDENTIAL
Embassy Ankara
Cable title:
INTERNATIONAL COMPACT WITH IRAQ -- DEBT RELIEF
how-toVZCZCXYZ0036 RR RUEHWEB DE RUEHAK #6366 3111611 ZNY CCCCC ZZH R 071611Z NOV 06 FM AMEMBASSY ANKARA TO RUEHC/SECSTATE WASHDC 9860 INFO RUEHGB/AMEMBASSY BAGHDAD 0798 RUEHFR/AMEMBASSY PARIS 5318 RUEHIT/AMCONSUL ISTANBUL 1593 RUEATRS/DEPT OF TREASURY WASHDC RUEHBS/USEU BRUSSELS
C O N F I D E N T I A L ANKARA 006366
SIPDIS
SIPDIS
TREASURY FOR INTERNATIONAL AFFAIRS - JROSE, MNUGENT, AND
MWELLER
E.O. 12958: DECL: 11/07/2011
TAGS: EFIN TU IZ
SUBJECT: INTERNATIONAL COMPACT WITH IRAQ -- DEBT RELIEF
FROM TURKEY
REF: A. STATE 18104
B. ANKARA 4304
C. ANKARA 2488
D. ANKARA 1529
Classified By: Economic Counselor Tom Goldberger for reasons 1.4(b) and
(d).
C O N F I D E N T I A L ANKARA 006366
SIPDIS
SIPDIS
TREASURY FOR INTERNATIONAL AFFAIRS - JROSE, MNUGENT, AND
MWELLER
E.O. 12958: DECL: 11/07/2011
TAGS: EFIN TU IZ
SUBJECT: INTERNATIONAL COMPACT WITH IRAQ -- DEBT RELIEF
FROM TURKEY
REF: A. STATE 18104
B. ANKARA 4304
C. ANKARA 2488
D. ANKARA 1529
Classified By: Economic Counselor Tom Goldberger for reasons 1.4(b) and
(d).
1. (C) Despite our repeatedly making the case -- at all
levels -- that it is in Turkey's interest to join the
international community in providing debt relief to Iraq,
Turkish officials have made it clear that they are not
receptive to debt forgiveness, though they may be willing to
consider rescheduling. Economy Minister Babacan and MFA U/S
Tuygan conveyed the Turkish view at the time of A/S
Sullivan's visit here in July (ref b).
2. (C) There are several factors driving Turkish officials to
resist discussion of forgiveness of Iraqi debt. First and
foremost, Turks think of themselves as a relatively poor,
financially-strapped country and, despite Iraq's current
travails, Turks see Iraq as a potentially prosperous country.
High oil prices tend to reinforce this view. Finally,
Turkey has little or no experience as a creditor in
international debt treatments that entail forgiveness.
Neither their bureaucracy nor their legal framework is set up
to handle debt forgiveness. The upcoming election in Turkey
is likely to add to the Turkish Government's unwillingness to
consider debt forgiveness.
3. (C) Turkish Treasury Director General for Foreign Economic
Relations told us November 6 that Turkey has completed debt
reconciliation with Iraq's debt advisors, but that he objects
to the use of LIBOR as a discount rate since Turkey's
borrowing cost is the interest rate at which it issues
Eurobonds, which is higher.
4. (C) We believe the best prospects for movement on this
issue with Turkey lie in high-level engagement from the Iraqi
government in the context of a broader discussion of
bilateral issues, reinforced by sustained, high-level
engagement from senior U.S. officials, including in
Treasury-to-Treasury channels.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON
SIPDIS
SIPDIS
TREASURY FOR INTERNATIONAL AFFAIRS - JROSE, MNUGENT, AND
MWELLER
E.O. 12958: DECL: 11/07/2011
TAGS: EFIN TU IZ
SUBJECT: INTERNATIONAL COMPACT WITH IRAQ -- DEBT RELIEF
FROM TURKEY
REF: A. STATE 18104
B. ANKARA 4304
C. ANKARA 2488
D. ANKARA 1529
Classified By: Economic Counselor Tom Goldberger for reasons 1.4(b) and
(d).
1. (C) Despite our repeatedly making the case -- at all
levels -- that it is in Turkey's interest to join the
international community in providing debt relief to Iraq,
Turkish officials have made it clear that they are not
receptive to debt forgiveness, though they may be willing to
consider rescheduling. Economy Minister Babacan and MFA U/S
Tuygan conveyed the Turkish view at the time of A/S
Sullivan's visit here in July (ref b).
2. (C) There are several factors driving Turkish officials to
resist discussion of forgiveness of Iraqi debt. First and
foremost, Turks think of themselves as a relatively poor,
financially-strapped country and, despite Iraq's current
travails, Turks see Iraq as a potentially prosperous country.
High oil prices tend to reinforce this view. Finally,
Turkey has little or no experience as a creditor in
international debt treatments that entail forgiveness.
Neither their bureaucracy nor their legal framework is set up
to handle debt forgiveness. The upcoming election in Turkey
is likely to add to the Turkish Government's unwillingness to
consider debt forgiveness.
3. (C) Turkish Treasury Director General for Foreign Economic
Relations told us November 6 that Turkey has completed debt
reconciliation with Iraq's debt advisors, but that he objects
to the use of LIBOR as a discount rate since Turkey's
borrowing cost is the interest rate at which it issues
Eurobonds, which is higher.
4. (C) We believe the best prospects for movement on this
issue with Turkey lie in high-level engagement from the Iraqi
government in the context of a broader discussion of
bilateral issues, reinforced by sustained, high-level
engagement from senior U.S. officials, including in
Treasury-to-Treasury channels.
Visit Ankara's Classified Web Site at
http://www.state.sgov.gov/p/eur/ankara/
WILSON