"TRNC GOVERNMENT" CALLS IT QUITS

C O N F I D E N T I A L SECTION 01 OF 03 NICOSIA 001543

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/11/2016
TAGS: PGOV PREL EUN TU CY
SUBJECT: "TRNC GOVERNMENT" CALLS IT QUITS

REF: A. LIBBY-SILLIMAN EMAIL (09/08/2006)

B. NICOSIA 975

C. NICOSIA 959

D. NICOSIA 47

E. NICOSIA 1345

NICOSIA 00001543 001.2 OF 003


Classified By: Amb. Ronald L. Schlicher, reasons 1.4 (b) and (d).


1. (C) SUMMARY. The ruling coalition in the "TRNC" resigned
on September 11 following months of internal wrangling in the
wake of June parliamentary bi-elections. Talat ally "PM"
Soyer, from the ruling CTP, announced his resignation and
said he would seek "new formulations," ditching "DPM" and
"FM" Serdar Denktash and leaving the "TRNC" without a
Denktash in high office for the first time ever. Soyer will
probably turn to a break-away group from the main opposition
UBP, and reportedly plans to make the leader of this group --
relative political lightweight Turgay Avci -- the new
"foreign minister" in order to secure a Serdar-free
parliamentary majority. Such a cabinet realignment would be
unlikely to produce any major shifts in the Turkish Cypriot
approach to the Cyprus problem, although it would represent a
milestone in internal politics, with the dominant CTP party
machine increasing its grip on power as the fractious right
wing continues to flounder. Ankara's role in the cabinet
reshuffle is murky and the subject of much speculation, but
it seems unlikely that the new arrangement does not have the
blessing of the Turkish Cypriots' large and influential
neighbor and benefactor. END SUMMARY.

CTP DROPS SERDAR
--------------


2. (SBU) Late in the evening of September 8, "TRNC PM" Ferdi
Soyer (head of the center-left CTP and a close ally of
"President" Mehmet Ali Talat) announced he would dissolve the
"government" on September 11, ending a partnership that had
existed between the self-declared pro-solution CTP and the
more nationalist DP of Serdar Denktash since before the 2004
Annan Plan referendum. Soyer's announcement that he would
seek "new formulations" to rule suggests that soon, for the
first time ever, there will be nobody named Denktash in high
office in the "TRNC."


3. (C) Under the Turkish Cypriot constitution, "President"
Talat will give Soyer (as leader of the largest party in
"parliament," with 25 out of 50 seats) first crack at forming
a new "government." Soyer is expected to turn to a four-man,
motley crew of "MPs" led by Turgay Avci (who recently
defected from the main right-wing opposition UBP) to create a
new absolute majority. CTP sources have indicated they
expect the new cabinet to be in place within two weeks, and
Avci told us privately that he has similar expectations.


4. (C) The CTP-DP divorce puts an end to the previous modus
vivendi between the two coalition partners, a rocky
partnership in which CTP had a free hand in most domestic
matters and -- through Talat -- in the most important
questions of foreign affairs, such as the Cyprus problem and
relations with the EU. In exchange, Serdar was left to
handle second-tier international questions (attending the OIC
as "TRNC FM," for example, and trying to drum up diplomatic
support in Africa),and reportedly allowed to line his own
pockets through DP's other two "ministries," Agriculture and
Economy/Tourism (which regulates casinos and is rumored to be
a rich source of kick-backs for the Denktash clan).


5. (C) This mutually beneficial, if unsavory, arrangement
came off the rails only recently (ref a). Political
relations between the two parties (as well as personal
relations between Soyer and Serdar) took a marked turn for
the worse after June elections in which the CTP improved its
position in "parliament," but the DP unexpectedly won control
of the powerful Nicosia municipality (ref b). Insiders from
both parties accuse each other of overestimating the
significance of their relative victories in June, and note
that negotiations on a new "government protocol" quickly
bogged down over portfolio disputes and "public
administrative reform" (i.e., the division of spoils and
control of such important sub-cabinet agencies like the
electricity authority).

WHAT'S NEXT?
--------------


6. (C) Soyer aide Erkut Sahali confirmed to us privately that
the "PM had already more or less completed" negotiations with
Avci and his allies, who are expected to form a new party and
-- if they can recruit a crucial fifth member -- a new
"parliamentary group" that would have the right to sit on all
the committees in the "TRNC" legislature. According to
Sahali, the current plan is for Avci to assume Serdar's old
titles of "DPM" and "FM," while his as-yet unnamed party

NICOSIA 00001543 002.2 OF 003


would assume control of the DP's other two ministries.


7. (C) Sahali noted that in exchange for being plucked from
relative obscurity and given "ministries" to run, Avci and
his allies had agreed to accept the "public administrative
reforms" that CTP had previously failed to extract from DP.
Sahali suggested that this might involve the rejiggering of
ministerial portfolios -- with, for example, a new
Environment "Ministry" (in CTP hands) perhaps taking over
some of the more powerful functions relating to tourism or
agricultural subsidies. The details, Sahali said, were still
up in the air but the broad outlines of the deal were in
place and would provide CTP with a much stronger hand in
government than it currently enjoys. Sahali did note,
however, that Avci was a "careerist" and admitted he might
prove to be a difficult and unreliable partner -- even if he
appeared to be a more palatable, easy-to-manage partner than
Serdar at the moment.


8. (C) This change will likely leave Serdar out in the cold;
although his DP still controls Nicosia and some other smaller
municipalities, many observers feel that Serdar will have
trouble keeping his party together without the direct ability
to distribute patronage. The DP is widely viewed as a
collection of opportunists united only by a vague
nationalist, Denktashian orientation. If this is true, and
Serdar cannot find a way back into government, DP support may
suffer over time as both strap-hangers and true believers
migrate to other parties with better prospects.


9. (C) Meanwhile, although Avci claims to have the
high-minded goal of creating a truly "liberal, center-right
formation," most observers agree with Sahali's initial
assessment that Avci has made an opportunistic move in order
to get into government faster than he would have had he
stayed with UBP. His defection from UBP (he had been SYG of
the party until a few days ago),however, appears to have
delivered a fatal blow to the short-lived party leadership of
Huseyin Ozgurgun. The inexperienced Ozgurgun, who was not
able to rescue his party's sagging fortunes in June's
elections, has announced he will not seek reelection to the
top job later in 2006. So far, only the charismatic (but
radically nationalist) former "FM" Tahsin Ertugruloglu has
announced his decision to run for the top party job --
although other candidates, including those who would do the
bidding of the retired, but still-powerful former party
leader and ex-"PM" Dervis Eroglu may yet emerge.

THE TURKEY FACTOR
--------------


10. (C) The role played by Ankara (whether the AKP, the "Deep
State," or both) in the coalition collapse is unclear --
although the left-wing press has speculated that the
splintering of the UBP, the expulsion of the DP, and the
further consolidation of the CTP have all been orchestrated
to some extent by Turkey. The latest rumor is that Avci and
his allies received USD 2 million each to defect from UBP,
perhaps to punish the party for disobeying Turkey's request
that it not challenge the "TRNC's" new property scheme (ref
c). Other commentators suggest that the Denktash clan's
chickens are finally coming home to roost after Rauf had the
audacity to oppose Turkey over the Annan Plan.


11. (C) Even less conspiratorial observers assume, however,
that Serdar's departure must have had the blessing of the
GOT. Serdar is widely believed to have functioned as an
insurance policy inside the "TRNC government," giving an
uneasy Turkey one additional form of leverage over the
leftist Talat lest he decide to go off the reservation and
give away too much in settlement talks or otherwise undermine
the "TRNC." It is possible that the AKP feels that Serdar
may have outlived his usefulness, however. We have heard
credible reports that during a recent visit to Turkey, Soyer
was "given the green light" by Erdogan to reshuffle his
cabinet and ditch DP -- provided he could do so without
inviting the "anti-Turkish" BDH of "MP" Mustafa Akinci into
power. Keen to play up their own independence, key Turkish
Cypriot players are quick to deny that Turkey has
orchestrated this government change, although in an unguarded
moment Avci privately admitted to us that he had, indeed,
received "encouragement" from Turkey to break off from UBP
and do a deal with CTP.

COMMENT: THE MORE THINGS CHANGE...
--------------


12. (C) While we cannot confirm what Turkey's role in the
reshuffle has been, rumors that AKP has nudged along this
change of government would be consistent with Ankara's
tradition of influencing politics in the north by dropping
quiet -- but specific and sometimes menacing -- suggestions
in the ears of the Turkish Cypriot leadership (ref d).

NICOSIA 00001543 003.3 OF 003




13. (C) INTERNALLY, CTP'S DECISION TO DUMP SERDAR IS
SIGNIFICANT. IT MARKS A FURTHER CONSOLIDATION OF POWER FOR
THE FORMER-COMMUNIST PARTY -- WHICH HAS A MIXED RECORD ON
INTERNAL GOVERNANCE AND ECONOMIC REFORM, BUT NONETHELESS IS A
MARKED IMPROVEMENT OVER THE PREVIOUS DENKTASH-DOMINATED
GOVERNMENTS. ALTHOUGH THE CTP'S ELECTORAL HONEYMOON IS LONG



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OVER, AND IT MUST NOW CONTEND WITH ANGER AND FRUSTRATION OVER
THE LACK OF A SOLUTION TO THE CYPRUS PROBLEM AND THE TURKISH
CYPRIOTS' CONTINUED "ISOLATION," TALAT'S PARTY IS STILL
POLITICALLY DOMINANT IN THE NORTH. ITS STRONG PARLIAMENTARY
NUMBERS, STRICT INTERNAL DISCIPLINE, AND GENERAL SUPPORT ARE
STILL SUFFICIENT THAT IT CAN EASILY FLIP ITS RIVALS (LIKE
SERDAR) AND STAY IN POWER -- A SITUATION THAT WILL CONTINUE
AS LONG AS THE RIGHT REMAINS DISUNITED, IDEOLOGICALLY ADRIFT,
AND SADDLED WITH UNINSPIRING LEADERS.


14. (C) EXTERNALLY, HOWEVER, THE CHANGES IN GOVERNMENT ARE
UNLIKELY TO PRODUCE MUCH CHANGE. THE UNRECOGNIZED "TRNC FM"
IS A TOOTHLESS POSITION WHEN ONLY THE COMMUNITY LEADER,
TALAT, CAN HAVE SERIOUS SUSTAINED DIALOGUE WITH THE OUTSIDE
WORLD. THE NEW "GOVERNMENT" WILL LIKELY CONTINUE ITS EFFORTS
TO CARVE OUT AREAS OF POLICY INDEPENDENCE FROM TURKEY WHERE
POSSIBLE, BUT THIS WILL PROBABLY NOT GO VERY FAR AND IS
UNLIKELY TO PRODUCE ANY SUDDEN FLEXIBILITY ON CYPRUS TALKS.
TALAT'S RECENT RIGHTWARD LURCH AND MORE HARD-LINE RHETORIC IN
HIS DEALINGS WITH THE UN (REF E) MAY HAVE REASSURED TURKEY



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THAT THEY HAD NOTHING TO DREAD IN AN ADMINISTRATION WITHOUT
DENKTASH. IN ANY CASE, THE NEW "GOVERNMENT" WILL STILL BE
SUSCEPTIBLE TO PRESSURE FROM ANKARA, STILL DEPEND ON A
NATIONALIST/OPPORTUNIST GROUPING FOR ITS PARLIAMENTARY
MAJORITY, AND STILL HAVE TO CONTEND WITH DOMESTIC
UNWILLINGNESS TO GIVE ANY MORE "CONCESSIONS" TO THE GREEK
CYPRIOTS.


15. (U) POST WILL REPORT SEPTEL ON THE COMPOSITION OF THE NEW
"GOVERNMENT" AND THE BACKGROUND OF NEW "MINISTERS" AS EVENTS
UNFOLD. END COMMENT.
SCHLICHER